nineteenth annual report 2003 - 2004 repor… · pranay kothari - executive director company...

NINETEENTH ANNUAL REPORT2003 - 2004

http://www.asiancerc.com

POLYPLEXCORPORATIONLIMITED

1ANNUAL REPORT 2003-2004

19th Annual Report

Board of Directors

Sanjiv Saraf - ChairmanS.G. Subrahmanyan - Vice ChairmanBrij Kishore SoniMukesh Kumar Jain - Nominee Director - IDBIAir Chief Marshal O.P. Mehra (Retd.)Ramesh BhatiaDr. Suresh SuranaPranay Kothari - Executive Director

Company Secretary

A.K. Gurnani

Auditors

Lodha & Co.,Chartered Accountants,New Delhi

Bankers

State Bank of PatialaHDFC Bank Ltd.State Bank of HyderabadState Bank of MysoreThe Federal Bank Ltd.Chinatrust Commercial Bank

Corporate Office

B-37, Sector-1NOIDA,Gautam Budh Nagar,Uttar Pradesh - 201 301

Registered Office & Works

Lohia Head Road, Khatima - 262 308,Distt. Udham Singh Nagar,Uttaranchal


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ANNUAL REPORT 2003-2004

CONTENTS

Notice (Separate Insert)

Directors� Report ........................................... 3-7

Management Discussion and Analysis Report .. 8-19

Report on Corporate Governance ................. 20-23

General Shareholders Information ................ 24-27

Auditors� Certificate .........................................28

Auditors� Report ......................................... 29-31

Balance Sheet ................................................. 32

Profit & Loss Account....................................... 33

Schedules .................................................. 34-50

Cash Flow Statement .................................. 51-52

Auditors� Report on Consolidated Accounts ........ 53

Consolidated Balance Sheet .............................. 54

Consolidated Profit & Loss Account ................... 55

Schedules to Consolidated Accounts ............. 56-68

Consolidated Cash Flow Statement .............. 69-70




Directors� Report

To the Members

Yours Directors have pleasure in submittingthe Nineteenth Annual Report and Audited

Accounts for the year ended March 31,2004.

The increase in EBIDTA of 39.6% duringthe year under review over the previousyear resulted from:

- Higher production of 13.2%

- Improvement in per unitcontribution (Selling price less rawand packing material) of 11.5% and

- An increase in fixed costs by13.0%

Both the domestic and export marketscontinued to be strong. The impact of

higher raw material prices in the lastquarter has been mitigated withcorresponding better sales realizations.

Interest and depreciation costs weremarginally higher. The profit before tax(PBT) increased by 66.7%. In theabsence of carried forward set-offs andphased reduction in export based taxrelief, the incidence of tax was higherat 31.7 % of PBT as against 27.8% inthe last year.

Profit after tax was higher by 57.4%.

1. Financial Highlights and Operations(Rs in Lacs)

2003-04 2002-2003

Earnings before Interest, Depreciation and Tax (EBIDTA) 5674.49 4064.70

Less : Interest & Finance Charges (Net) 901.56 851.25

Less : Depreciation 921.56 903.54

Profit before Tax 3851.37 2309.91

Less : Provision for Current Tax 1166.16 677.75

Less : Provision for Deferred Tax 56.14 -35.96

Add/(Less) : Previous year adjustment - tax -1.26 0.72

Profit after Tax 2627.81 1668.84

Add : Surplus brought forward 3850.70 3086.30

Add : Debenture Redemption Reserve written back 8.25 781.75

Profit available for Appropriations 6486.76 5536.89

Appropriations :

Transfer to General Reserve 300.00 167.00

Transfer to Debenture Redemption Reserve 425.00 1125.00

Interim Dividend 292.85 146.42

Proposed Final Dividend 292.85 219.63

Corporate Dividend Tax 75.04 28.14

Balance surplus carried to Balance Sheet 5101.02 3850.70

Total 6486.76 5536.89


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The commencement of commercialoperations at Thailand is reflected insignificantly higher sales and otheroperating parameters.

More details on operations and a viewon the outlook for the current year aregiven in the �Management Discussion &Analysis Report�, which forms a part ofthe Annual Report.

3. Dividend

An interim dividend of Rs.2.00 per shareduring the year (tax free in the handsof shareholders) was paid in November2003. The Directors are pleased torecommend payment of a final dividendof Rs. 2.00 per share which shall befree of tax in the hands of shareholders.This dividend will be paid after itsdeclaration by the shareholders in theensuing Annual General Meeting.

4. Projects

a) Expansion in Polyplex (Thailand)Ltd., (PTL)

PTL, your company�s wholly ownedsubsidiary company, aftercommissioning its first Polyester Filmline in April 2003, commencedcommercial shipments from thesecond line in November 2003. Thisexpansion was completed within tenmonths. Both the lines are currentlyoperating to capacity. PTL now hasa (restated) capacity of 39000 MTfor PET films.

The Project to manufacture PETchips is under implementation. Thebatch process plant is expected tobe on stream by August 2003 and

the continuous process unit isscheduled to commence productionby November of this year.

b) New Project

Your Company�s decision to set upa PET line with a capacity of 24000MTA in India at its existing locationat Khatima was reviewed by theDirectors. After careful evaluation ofthe market opportunities includingthe evolving domestic marketoutlook and considering the longterm strategic objectives of thecompany it was decided that itwould be more appropriate to sitethe next expansion in Europe.Alternative locations are beingexamined and financing is beingarranged. Subject to satisfactorytechnical and financial arrange-ments, this project should be onstream by the third quarter of nextyear.

5. Subsidiary Company

A statement pursuant to Section 212 ofthe Companies Act, 1956 relating toPolyplex (Thailand) Limited, subsidiarycompany is attached.

6. Consolidated Financial Statements

Audited Consolidated FinancialStatements for the year ended March31, 2004 under Indian GAAP areattached.

7. Directors� Responsibility Statement

As required under Section 217 (2AA),which was introduced by the Companies(Amendment) Act, 2000 your Directorsconfirm that: -

2. Consolidated Working Results (Under Indian GAAP)

(Rs. in Lacs)

2003-04 2002-2003

Net Sales and other income 38148.04 14532.98

Profit before Interest, Depreciation and amortisation 10926.43 3822.10

Profit before tax 8001.19 2053.09

Provision for tax 1223.56 641.07

Profit after Tax 6777.63 1412.02

Earnings Per Share of Rs.10/- Each Rs.46.29 Rs.9.64




i) In the preparation of the annualaccounts, the applicable accountingstandards have been followed;

ii) The Directors had selected suchaccounting policies and applied themconsistently and made judgmentsand estimates that are reasonableand prudent so as to give a trueand fair view of the state of affairsof the Company as on March 31,2004 and of the profit of theCompany for the year ended onMarch 31, 2004.

iii) The Directors have taken proper andsufficient care for the maintenanceof adequate accounting records inaccordance with the provisions ofthe Companies Act, 1956 forsafeguarding the assets of theCompany and for preventing anddetecting fraud and otherirregularities.

iv) The Directors have prepared theannual accounts on a �going concern�basis.

8. Other Information

Information as required by Section 217(1)(e) of the Companies Act, 1956 readwith Companies (Disclosure ofParticulars in the Report of the Boardof Directors) Rules, 1988 and Section217 (2A) of the Companies Act, 1956,read with Companies (Particulars ofEmployees) Rules 1975, are given inthe Annexure to this Report.

9. Directors

Shri Ramesh Bhatia and Shri S.G.Subrahmanyan retire by rotation andoffer themselves for re-election.

10.Auditors

The Company�s Auditors M/s. Lodha &Co., Chartered Accountants, retire at theforthcoming Annual General Meeting andbeing eligible, are willing to be re-appointed.

11.Depository System

Your Company�s equity shares are beingtraded in �demat� form by all investorssince April 30, 2001. Shareholders ofthe Company who are still holdingshares in physical form are advised toget their physical shares dematerialisedby opening an account with one of theDepository Participants.

12.Acknowledgement

Your Directors wish to place on recordtheir appreciation of the wholeheartedand sincere cooperation the Companyhas received from the variousdepartments of Central/StateGovernment, Financial Institutions andthe Bankers to the Company. YourDirectors also wish to place on recordtheir appreciation of the dedicated andsincere services rendered by theemployees of the Company.

For and on behalf of the Board

Place : NOIDA SANJIV SARAFDate : June 3, 2004 CHAIRMAN


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Annexure to the Directors� Report

(Additional information given in terms ofNotification 1029 of 31-12-1988 issued bythe Department of Company Affairs)

A. CONSERVATION OF ENERGY:

As a result of the Energy Auditconducted by External Experts followingenergy saving schemes were identifiedand implemented:

� Individual switches provided forindividual lights in utility area.

� Out door area lighting integratedwith street lighting. In plant lightingconnection separated.

� Installation of energy efficient motoron TDO side blowers.

� Replaced chilled water circulationpump with new energy efficientpump.

B. RESEARCH & DOVELOPMENT (R&D)

Following R & D activities carried out inthe year 2003-04 which led to improvedQuality & Better Productivity

� Chemical Coated film for retortapplication - Trials carried out atcustomers end. Product stabilizedtechnically.

� Metalised Chemical coated film forFRP application - New developmentin the Export Market.

� Metalised yarn grade film -Production established and normalsupplies made to the DomesticMarket.

� Developed Low Haze film for specialapplications.

C. TECHNOLOGY ABSORPTION,ADOPTION AND INNOVATION

� Ultrasonic system installed to cleandisc filter.

� New Slitter Installed for slitting ofMetallised rolls.

� Condition Based Maintenanceactivity strengthened with theaddition of SPM Vibration Analyzer.

D. FOREIGN EXCHANGE EARNINGSAND OUTGO

Earned : Rs. 6257.96 Lacs(Rs.5925.68 Lacs)

Used : Rs. 1060.71 Lacs(Rs. 877.50 Lacs)




Statement pursuant to Section 212 of the Companies Act, 1956, relating toSubsidiary Company :

1 Name of the Subsidiary Company Polyplex (Thailand) Limited2 Financial Year of Subsidiary

Company ended on March 31, 20043 a No. of shares held at the end of 8,527,370 Equity Shares of Thai Baht

the financial year 10 each fully paid up and 4,672,630Equity Shares paid up to the extentof Thai Baht 7.10 per share.34,109,480 Non-cumulative Prefe-rence Shares of Thai Baht 10 eachfully paid up and 18,690,520 to theextent of Thai Baht 7.10 per share.

b Extent of Interest at the end of 100%the financial year

4 Net Aggregate amount of Rs.3891.13 LacsProfit/(loss) of the SubsidiaryCompany so far as it concerns theMembers of the Holding Company

a Not dealt with in the accounts ofthe holding Company� for the subsidiary�s financial Rs.4149.82 Lacsyear ended March 31, 2004

� for the previous financial years (Rs. 258.69 Lacs)of the Subsidiary Company

b Dealt with in the accounts of theholding Company� for the subsidiary�s financial Nilyear ended March 31, 2004

� for the previous financial years Nilof the Subsidiary Company

Statement showing particulars of employees of the Company required u/s 217 (2A) of theCompanies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 andforming part of the Board of Directors Report for the year ended March 31, 2004.

Name Designation Age Qualifications Date of Experience Remune LastYears Joining Years ration(Rs) Employment

Mr. Ranjit Singh President 47 B.E.(Mech.) 13.11.1996 22 32,12,400 SRF Ltd.(Film Business) PGDBM Dy. General Manager

Marketing & Planning

Notes:1 Remuneration includes salary, performance award, actual expenditure incurred in connection with the residential

accommodation, reimbursement of medical expenses, LTA, contribution to Provident Fund and SuperannuationFund and value of perquisites calculated in accordance with the rules framed under the Income Tax Act, 1961.

2. Above employee does not hold more than 2% of the paid up capital of the Company nor is a relative of anyDirector.


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Management Discussion and Analysis

1. INTRODUCTION

Your Company is engaged in themanufacture and sale of Polyester (PET)Film with an installed capacity of 20,000TPA at its Works located at Khatima, Distt.Udham Singh Nagar, Uttaranchal. Inaddition, it has an installed capacity of20,000 TPA of PET Chips for captiveconsumption and 4,800 TPA of MetallisedFilm at the same location.

Polyplex (Thailand) Ltd. (PTL), theCompany�s wholly owned subsidiaryoperates two film lines with an aggregatecapacity of 39,000 TPA with the firstline having being commissioned in April2003 and the second one in November2003.

2. PRODUCT

PET film is a high performance film madefrom polyethylene terephthalate resin(generally known as Polyester Chips),which in turn is produced from dimethylterephthalate (DMT)/polyethyleneterephthalic acid (PTA) & mono-ethyleneglycol (MEG).

The five main categories of PET filmapplications are as under:

(a) Packaging: Commodity films andspecialty film used primarily forflexible packaging.

(b) Imaging: Printing films- layout base,masking film and printing plates, aswell as reprographic, microfilms etc.

(c) Electrical: Wire and cable wrap,membrane switches, flexible printedcircuits, capacitors and motorinsulation.

(d) Magnetic media: Audio and videotape, as well as computer tape andfloppy discs.

(e) Others (Industrial): PrimarilyIndustrial comprising of Hot stampingfoils, photo-resist, labels and manymore.

Another broad categorization made by theindustry is Thin (including Magnetic media)and Thick films. Your Company operatesin the thin film segment focusing on thePackaging, Industrial and Electrical (PIE)segments.

3. INDUSTRY SCENARIO

(a) Global

(i) Capacity & Demand - Size andGrowth

The global installed merchant capacityis estimated at 1.61 million tonnes asat the end of 2003, of which roughly1/4th is dedicated to thick film andthe balance in thin film segment. Thetotal merchant capacity for thin filmsis estimated to be 1.22 million tonnes.Against this, the thin film merchantmarket size for 2003 is estimated tobe 1.07 million tonnes.

Growth at a global level is estimatedto average 4.8% over the past 5years. The segments of concern forthe Company, the PIE segments grewat 8.7% over the last 5 years. Thesegrowth levels should be maintainedin the years ahead with higher ratesin Asia - in particular India and China,being offset by slower growth in thedeveloped world. The growth of ThinFilms (excluding Magnetic Media) inthe developed countries is projectedto be higher than the overall growthin PET film demand.

While USA, Western Europe and Japancurrently account for 60% of total filmconsumption, the industry isgravitating towards Asia both in termsof consumption and new capacitycreation.

(ii) Industry Structure and Evolution

After a period of PET film shortagein the mid-90�s, which led to highprof i tabi l i ty for al l producersworldwide, the industry saw a hugecapacity build up resulting in asignificant oversupply situation.Competit ive pressure furtheraggravated by the East Asiancurrency crisis in mid-1997 led to asevere erosion of pr ices tounprecedented levels and al lproducers of PET film went throughan extremely difficult period between1997 and 2000. Limited capacitycreation, large-scale consolidation asalso the rationalization of capacityby closure of uneconomic old linesby some players, helped restore asemblance of stability to the PET film




markets worldwide towards the endof 2000.

With proliferation of technology andcapacity, the emphasis has moved toevolving a competitive cost structure.This, along with increasing concernson optimizing return on capital hasled to consolidation among the World�Majors� and has created businesseswhich are truly global in scope interms of capacity, geographical reachand product offering.

(iii) Current Scenario

With demand growing faster thanincremental supply, the CapacityUtil ization in the industry hasimproved significantly in the recentpast notwithstanding the addition tocapacity - primarily in Asia. It is ourunderstanding that high operatingrates in thin films, which are closer tooptimal production capability, setofflower rates for thick films.

(iv) Trade Actions

International trade in PET film hasbeen prone to trade actionsparticularly in Europe and U.S.A.where there are large imports. Achronological list of such actions andtheir current status is givenhereunder:

Details on the impact of thesedevelopments on the Company�sworking are given later in this Report.

However, an analysis of the history ofthe various cases till date shows thatwhile initial duty rates may be high,exporters tend to incorporate theappropriate monitoring mechanismsand modify sales practices, followingwhich these duty rates aresubstantially reduced, if not eliminatedaltogether.

(v) Conclusion

The overall global market scenario canbe summed up as under:

� The explosive capacity expansionin the mid 90�s is unlikely to berepeated given the unsatisfactoryexperience of the Lenders/Investors with new entrants to thebusiness in East and South Asia.

� Industry information indicates thatorders have been placed forseveral thin film lines in China,which if all operationalised couldhave a potentially destabilizinginfluence. However, it is generallybelieved that many of these linesare unlikely to be implementedbecause of credit and otherconstraints.

Table 1

Year Action By Against Results

1988 Dumping EU Korea Terminated without any measures


1991 Dumping USA Korea & Duties imposed, but over years are now minimal for Korea andJapan the order was revoked with respect to Japan in 1995


1998 GSP Removal USA India Preferential status removed and normal duty of 4.2% imposed

1999 Subsidy EU India CV duties between 3-19% imposed

2000 Dumping China Korea Duties between 13-46% imposed

2000 Dumping India Korea & Duties between 0.16-0.92 $/kg imposedIndonesia

2000 Dumping EU India & Duties between 0-67% on Indians and 3-12% on KoreansKorea imposed, Price Undertaking from Indian exporters accepted at

margin elimination level

2002 Dumping & USA India & Duties between 19-30% on Indians and 2-3% on TaiwaneseSubsidy Taiwan imposed

2002 Subsidy Brazil India No duties imposed due to lack of injury

2003 Dumping Brazil India Case withdrawn

2003 GSP Removal USA Thailand Initiation of proceedings for removal of Preferential status; toresult in imposition of normal duty of 4.2%


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� The cyclical nature of the industrywould continue - however, theseverity of the ups and downs aswitnessed since 1995 would bemoderated.

� Dominance of the three Japanese/U.S. Corporations who currentlycontrol 50% of the market is likelyto continue though with areducing share of the globalcapacity. However, decline in theirtraditional market segments asalso relatively slower growth intheir home markets has constrai-ned their ability to improveviability of their PET film opera-tions. Lowering manufacturingcosts through acquisitions andjoint ventures in the low costAsian countries, rationalization ofcapacity and continued emphasison technology intensive nicheproducts could be an importantstrategic response.

� Most of the new capacity will bebuilt in Asia because of lowercapital and manufacturing costsand higher growth rates in thisregion.

� The transitioning of the industryto Asia will increase competitivepressure in the years to come.

� Demand is likely to continue togrow between 5% and 10% inthe PIE segments.

� The current state of the demand-supply balance presents growthopportunities for companies whichare:� Cost competitive and can

match quality requirements inthe packaging and industrialsegments

� Focused with a goodunderstanding of the markets

� Have a global outlook� Have good distribution reach.

(b) Domestic

The domestic market is currentlyestimated to be 115,000 MT mainlycomprising of thin films (excludingmagnetic media). As per data collatedby the US International TradeCommission in the course of an

investigation, the domestic markethad grown at a compounded annualgrowth rate of 19.4% during theperiod 1999-01. The companyestimates that domestic demand hascontinued to grow at about 15-20%during the year under review, largelyon account of the increase in demandfor thin films, with packaging beingthe dominant application and driverof growth.

In addition to the domestic demand,the Indian manufacturers havehistorically exported 40-50,000 MT ofPET film annually. However, theexports to US and EU from India havedeclined in the recent past due to thegrowth in the domestic markets andthe imposition of AD/ CVD duties.

The total installed capacity during2003-04 is estimated at about153,000 tonnes, which comprises39,000 tonnes of thick film and114,000 tonnes of thin film.

Overall, the production for thin filmlines has been higher than the ratedcapacity.

With the commissioning of two lineswith a capacity of 39,000 TPA in thepast few months and two more linesexpected to start later this yearaggregating to 48,000 TPA, someuncertainty in the domestic market inthe short-term is anticipated.

It is relevant to point out thatPolyplex�s current exposure to theIndian markets is limited to 20-25%of its consolidated sales.

4. POLYPLEX�S POSITION

Your Company has built itscompetitiveness over the years based onthe following:� Low project costs� High operating rates� Low overheads� Strong customer relationships� Focus on the high growth segments� Stable management team

This is reflected in any comparison of thefinancials of the domestic PET filmmanufacturers. It has enabled yourCompany to maintain profitable operationsat a time when most competitors havebeen incurring substantial losses.




EBITDA Margin Comparisonwith the Indian Industry*

2003-04 2002-03 YoYRs. in Lacs Rs. in Lacs Change

(%)

Net Sales 37273 14207 162%

Other Income 875 326 168%

Earnings beforeInterest, Depre-ciation & Tax(EBITDA) 10926 3822 186%

Interest Costs 1253 848 48%

Depreciation 1672 921 82%

Profit before Tax(PBT) 8001 2053 290%

Provision forCurrent Tax 1166 678 72%

Provision forDeferred Tax 56 �36 255%

Previous yearadjustment-Tax �1 1 �200%

Profit after Tax(PAT) 6778 1412 380%

* Some of the Companies operate in other businesssegments also, which have not been excluded due tolack of availability of segmental data for all the years.

Above chart compares the Company�sstand-alone EBITDA margin with the fourlargest competitors in India. YourCompany�s margins have been consistentlysuperior to its competitors in India. Inthe recent years, your Company�s Saleshave been constrained by the lack ofcapacity, while others have been able toincrease their volumes due to availabilityof unutilized capacity, leading to anarrowing of the gap between Polyplexand others.

5. REVIEW OF OPERATIONS

(a) Income Statement

The abridged Consolidated Profit andLoss statement for the financial yearended March 31, 2004 is given below:

The Consolidated profitability figures for2003-04 include figures for PTL.

Sales volume at PTL was 54% of the totalsales volume. With the startup of thefacility in Thailand, there has been asignificant step-up in the size of theCompany�s operations.

The abridged Stand-alone Profit and Lossstatement for the financial year endedMarch 31, 2004 is given below:

2003-04 2002-03 YoYRs. in Lacs Rs. in Lacs Change

(%)

Net Sales 18625 14207 31%

Other Income 438 331 32%

Earnings beforeInterest, Depre-ciation & Tax(EBITDA) 5674 4065 40%

Interest Costs 902 851 6%

Depreciation 922 904 2%

Profit before Tax 3850 2310 67%

Provision forCurrent Tax 1166 678 72%

Provision forDeferred Tax 56 -36 255%

Previous yearadjustment-Tax �1 1 �200%

Profit after Tax(PAT) 2628 1669 57%

(i) Production and Sales Volume(stand-alone operations)

During the year under review theCompany was able to achieve a higherproduction volume at 19,046 MT anincrease of 13% of the previous year.This can largely be attributed to theproductivity initiatives like TotalProductive Maintenance (TPM) and de-bottlenecking undertaken at the plant.Since production has now beenconsistently higher than the ratedcapacity of 15,000 MT per year overthe last three years, the nameplatecapacity for both the film and thechips plant has been restated at20,000 MT each.


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Production

Sales volumes increased by 12% overthe previous year continuing to beconstrained by the lack of adequateproduction capacity. Exports volumesconstituted 32% of sales in volumeterms.

Sales Mix

(ii) Selling Price and Value Addition(stand-alone operations)

Higher selling prices, both in thedomestic and export market werereflected in better value additionsnotwithstanding the increase in rawmaterial prices. Substantial sales ofmetallised film have resulted in anincrease in the average selling pricesand raw material.

Selling Price andValue Addition Trend

iii) Profitability (stand-aloneoperations)

With higher production and betterpricing, your Company has been ableto increase its operating profit(EBITDA) in 2003-04 by 40% over2002-03.

The interest costs were higher duringthe year as compared to previous yearon account of higher level of long-term borrowings during the currentyear. Depreciation increased by 2%with the capitalization of a Slitter andcertain other assets.

In aggregate, this has lead to a 67%increase in the Profit before Tax andExceptional items.

In the absence of carry-forward set-offs and reduction in export-based taxexemption, the effective tax rate(excluding deferred tax) for theCompany has increased to 30%. As aresult, the distributable profit hasincreased by 57%.

Profitability Margins

(b) Cash Flows

The Consolidated cash flows for theCompany for the year 2003-04 are asfollows:

Profitability




Particulars 2003-04 2002-03Rs. in Lacs Rs. in Lacs

A) INFLOWSOperating Profit 10994 3756Net changes in loan funds 4368 9218

TOTAL 15362 12974

B) OUTFLOWSIncrease in Investments 779 -539Net Additions toFixed Assets 8839 11548

Working Capital Changes 3559 -103Net Interest/DividendPayments 1641 1106

Direct Tax payments 1263 677Movements in Loans &Advances -50 -100

Net Increase in Cash -669 385

TOTAL 15362 12974

The strong operating cash flows havehelped in minimizing the increase inthe debt for the Company.

The consolidated cash flows alsoreflect the increase in Fixed andCurrent assets at PTL consequent tothe commencement of commercialoperations at PTL.

The stand-alone cash flows of theCompany during the periods underreview were as under:

Particulars 2003-04 2002-03Rs. in Lacs Rs. in Lacs

A) INFLOWSOperating Profit 5653 4065Net changes in loan funds 761 3320

TOTAL 6414 7385

B) OUTFLOWSNet Increase in Investments 3477 3462Net Additions to Fixed Assets 345 1219Working Capital Changes 856 850Net Interest/ DividendPayments 1265 1109Direct Tax payments 1264 677Movements in Loans &Advances -50 -100Net Increase in Cash -741 168

TOTAL 6414 7385

During the year, the Company retainedits rating of PR1+ for its short termborrowings programme for anenhanced value of Rs. 15 Crores andAA- for long term paper for anenhanced value of Rs. 62 Crores byCARE.

The discounting of receivables wasreduced during the year to achieve areduction in the cost of working/capitalwhich led to a higher level ofreceivables.

The tax outflow has been higher onaccount of the higher effective taxrate.

(c) Balance Sheet

The Consolidated Balance Sheet forthe year 2003-04 is given below:

The Company invested additional USD5.75 mill ion in the Equity andPreference Capital of Polyplex(Thailand) Ltd (PTL).

Particulars March 2004 March 2003Rs. in Lacs Rs. in Lacs

CAPITAL & LAIBILITIES:Shareholders� Funds 15524 9317Loan Funds 17881 13536Deferred Tax Liability (Net) 1880 1824

Total 35285 24677

ASSETS:Net Block (incl. CWIP) 28200 21327Investments (incl. ShareAppl. Money) 837 30

Net Current Assets 6248 3320

Total 35285 24677

The term debt-equity ratio as at March31, 2004 was 0.90: 1.

The summarized stand-alone BalanceSheet of the Company for the lasttwo financial years is given below:

Particulars March 2004 March 2003Rs. in Lacs Rs. in Lacs

CAPITAL & LAIBILITIES:Shareholders� Funds 11609 9642Loan Funds 8376 7638Deferred Tax Liability (Net) 1880 1824

Total 21865 19104

ASSETS:Net Block (incl. CWIP) 10535 11015Investments (incl. ShareAppl. Money) 7537 4032Net Current Assets 3793 4056

Total 21865 19104


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Employed (ROCE) as well as Returnon Net Worth (RONW).

6. HUMAN RESOURCES & SYSTEMSINITIATIVES

a) Human Resources

The success achieved by the Companyso far has been in large measure dueto its people. The Company has a well-qualified and stable managementteam, which has enabled it toconsistently out-perform the industryin India. The talent and commitmentof the team is also reflected in thefact that the PET film lines in Thailandhave been set up ahead of scheduleand well within the budgeted cost. Asmentioned in the last annual report,your Company had retained theservices of Hewitt Associates, a globalconsulting firm, to advise the companyon the enhanced organizationalrequirements. They have suggestedcertain changes in the organizationstructure involving segregation ofstrategic and operational roles andmoving to a profit-center basedmodel. In addition, recommendationshave been made on the manning ofsales and marketing function andvariable-pay compensation. Theserecommendations are in the processof being implemented.

Your Company entered into a 3-yearWage Agreement with its workmen atits Plant in India in May 2003. Labourrelations, both in India and Thailand,continue to be cordial.

b) Systems Initiatives

During 2002, the Company hadimplemented an Enterprise ResourcePlanning (ERP) solution, SAP - R/3, inorder to enhance transparency,improve the responsiveness tocustomers, manage processes moreefficiently and streamline theproduction planning and controllingprocess. The benefits of this initiativehave started yielding results. Afterhaving gained sufficient experience inIndia, it is proposed to extend theprogramme to Thailand as well as theproposed expansion in Europe so asto achieve a complete integration ofactivities.

An analysis of the Balance Sheetreveals a stable and healthy financialposition. With the addition of theSurplus profit generated during theyear, the Net worth of the Companyhas increased by 20%.Notwithstanding the debt increase, thedebt-equity ratio (term debt) of theCompany continues to be acomfortable 0.45: 1.

(d) Key Financial Ratios

The key financial ratios on aconsolidated basis for 2003-04 aregiven below and include the figuresfor PTL.

2003-04

Term Debt - Equity Ratio * 0.90Term Debt/EBITDA 1.43Interest Cover (PBIT/ Interest) 7.39ROCE 30.8%

RONW * 47.5%

* Net worth includes Deferred Tax liability

The successful operations of PTL haveimpacted the financial position ofcompany favourably leading to higherROCE and RONW.

Some of the key financial ratios ofthe stand-alone operations for the lasttwo financial years are given below:

Year Year2003-04 2002-03

Term Debt -Equity Ratio * 0.45 0.57Term Debt/ EBITDA 1.08 1.62Interest Cover(PBIT/ Interest) 5.26 3.71ROCE 23.2% 18.8%RONW * 21.1% 15.4%

* Net worth includes Deferred Tax liability

The leveraging is conservative asreflected by its low financial gearing,high interest cover and a reasonableDebt/ EBITDA ratio all of whichchanged favourably during 2003-04over the previous year.

There was an increase in the Capitalemployed during the year due to theincrease in debt levels as a result ofthe investment in Thailand. However,because of higher profits during thecurrent year, there was markedimprovement in Return on Capital




TPM has continued to yield significantresults in operational improvements,reduction of wastage and organizationlearning.

7. ANTI-DUMPING / ANTI-SUBSIDYACTION IN THE EUROPEAN UNIONAND U.S.A.

(a) European Union (EU)

1. The current normal import duty levelon PET film imported into the EUcountries from India is effectively3.50%.

Based on complaints by European PETfilm producers the European Commi-ssion (EC) carried out investigationsagainst Indian exporters and leviedCountervailing duties towards the endof 1999. In the case of Polyplex, aCountervailing duty of 19.1% wasimposed.

2. These countervailing duties areapplicable for a period of 5 years andthe sunset review is now due at theend of 2004. It is expected that theseduty levels would decline substantially,if not get eliminated altogether, dueto structural changes in the exportincentive schemes.

3. In May 2000, the EC also initiated anAnti-dumping investigation againstimports of PET films from India andSouth Korea and imposed Anti-dumping duties on Indian and Koreanexporters. The anti-dumping dutyapplicable to Polyplex is 38.6%.

4. Subsequently, Price Undertakings weregiven by the Indian manufacturers,which seek to neutralize the dumpingduties established for each exporterby stipulating minimum prices (at theEx-factory levels) on a product-wisebasis to be achieved by each exporteron its export sales to the EU. It mustbe added that the CVD/normal dutiesare still to be paid on exports to theEU.

5. The Company�s request to extend thePrice Undertaking to the CVD is underconsideration of the EuropeanCommission.

6. The EC has, in November 2003,initiated a partial interim review of

the AD measures, which could possiblylead to a revocation of the provisionfor price undertaking.

7. In February 2004, the EC initiated aninvestigation into the possiblecircumvention of AD and CVDmeasures on the import of PET filmoriginating in India, by import of PETfilm consigned from Brazil and Israel.A positive finding of circumventionwould result in the imposition of theduties applicable on imports fromIndia to being extended to theCompanies in Israel and Brazilindulging in circumvention.

8. The AD and CVD measures againstthe Company are limited to exportsfrom India and are not applicable forexports by the Company�s whollyowned subsidiary in Thailand.

(b) U.S.A.

1. In June 2002, the US Department ofCommerce (DOC) issued a notice inthe Federal Register imposing finalAnti-dumping and CountervailingDuties against import of PET film fromIndia as follows:

a) Countervailing Duties: Between18.43% & 24.48%. The applicablerate for your Company was18.66%.

In the preliminary determinationof the first administrative review,the DOC had computed CVD ratesof 21.49% for 2001 and 23.05%for 2002. Polyplex has filed itscase brief and expects a reductionin the rates.

b) Anti-dumping (AD) duties: Bet-ween 0% & 5.68%. No anti-dumping duty has been levied onimports from your Company. ThePetitioners have appealed to theCourt of International Trade (CIT)against DOC�s treatment of thesubsidy margins in arriving at theAD duty and thereby the exclusionof the Company from the ADorder.

2. The impact of these duties, if any, islikely to be limited going forward onaccount of the following reasons:


16



a) It is important to note that in theU.S. as distinct from the E.U., theduties announced following theinvestigation only set the cashdeposit rate with the actual dutiesbeing recomputed based on theactual level of dumping or availingof subsidies as established insubsequent annual reviews, andshortfall/excess is collected/refunded with interest. With thegradual reduction and proposedphasing out of the DutyEntitlement Passbook Scheme(DEPB), which forms the principalcomponent of the allegedsubsidies, the assessed level ofsubsidies would be henceforthsubstantially lower than thefinding for the period ofinvestigation.

b) The investigation had concludedthat there was no dumping byyour Company. In case there isan adverse ruling at the CIT, itwould result in the imposition of0% cash deposit rate and alsocovering of the Company underAD administrative reviews.

c) Past experience shows (in theKorean and Japanese PET filmcase in the US) that exportersimplement effective monitoringmechanisms, which brings downthe dumping / subsidy marginsprogressively and in a verysubstantial manner.

3. Following a petition filed by thedomestic industry in the US inSeptember 2003, the United StatesTrade Representative has initiated aninvestigation which could lead to theremoval of the GSP benefit on theimport of PET film from Thailand, inwhich event the import would besubject to a duty of 4.2% as againsta nil rate currently.

4. These AD and CVD measures are notapplicable for PTL.

8. EXPANSION PLAN

Consistent with its overall strategy ofdiversifying its manufacturing operations,

PTL has decided to put up a new film linein Europe with a capacity of 24,000 TPA.Certain locations are at an advanced stageof evaluation and an election will be madeshortly. The investment would be in thevicinity of US $ 45 million, inclusive ofworking capital.

With this location, your company will haveready access to an existing large marketin Western Europe where no new capacityis being built notwithstanding a continuedgrowth in the market. This market alsoimports significant quantities. In addition,the unit would be in a position to accessmarkets in Russia, CIS and Central andEastern Europe, which though smallcurrently, have a lot of potential giventhe stage of economic growth of theseregions. Further, the countries around theMediterranean rim are another possibledestination for the output.

This project would be a key element inthe plan to build a global footprint andassociate with dominant customers in theconverting and industrial segments.Savings in freight and duty and likelybetter pricing would offset the higheroperating costs of a manufacturing set upin Europe.

Based on our initial experience at the newlocation and market conditions, plans callfor subsequent setting up of another linealongside the proposed unit andintegrating backwards into chips so thatwe have a facility similar to that inThailand.

9. RISK MANAGEMENT

(a) Industrial cycles

The volatility in earnings resultingfrom the cyclical nature of thebusiness is a concern. This stems fromthe fact that capacity additions tendto be bunched whereas the growth indemand is more even. Your companyhas sought to mitigate this riskthrough a number of actions andinitiatives. Some of the steps are:

i) We believe that we are one of thelowest cost producers of PET film inthe world. We seek to constantlystrengthen this position. Measures tothis end include:




� Production at the plant at Khatimahas increased from 12,398 MT in1998-99 to 19,046 MT in the yearunder review, an increase of 54%.A further improvement in thecurrent year is anticipated.Programs like TPM have beencritical to this success.

� Production in Thailand has shownconsistent improvement and hasaveraged 3287 MT per monthduring the first two months of thecurrent financial year.

� Important elements of the coststructure-apart from raw materialcover packing, power and fuel andfreight. Sustained efforts areunderway to exercise control onthese costs.

� With the commissioning of thesecond line in Thailand andthe chips plant currently underimplementation there, the perunit costs are set to declinedramatically.

� Power and fuel costs aresignificantly lower in Thailand thanin India. Access to a port in theimmediate vicinity has ensured areduction in freight costs forexports.

ii) Several initiatives are underway tobroadening the product portfolio,including the development of certainvalue added films.

iii) Manufacturing facilities in Thailandenable quick access to the fastgrowing Asia-Pacific region. There isa preferential duty treatment in somecountries within the ASEAN region.

iv) Accessing customers operating acrosscountries in the flexible packaging andindustrial segments by presentingalternative sourcing options from Indiaand Thailand and thereby mitigatingtheir risks. This enables a more stablepricing regime.

v) Deepening of the distribution reach isan important objective, which issought to be accomplished by anappropriate mix of channel

partnerships, direct presence anddealer representation andstrengthening of the sales team.

vi) Your company has in the past builtstrong relationships with customers,which has helped it weather marketconditions. It intends to forcefullyextend this strategy to newcustomers.

vii) Geographically diversifiedmanufacturing should incorporatevarying market conditions in differentregions

(b) Product Concentration

Your company operated only in oneproduct line - i.e. Polyester films. Thisshould be viewed in the context ofthe following factors:

� Polyester film has a range ofapplications and a decline in onecan be offset by increase inanother. Illustratively, while themagnetic media has beenwitnessing a decline, the overalldemand continues to increase asapplications such as packaginghave exhibited a strong andsustained growth.

� Your company has demonstratedits leadership in profitability in thedomestic as well as globalindustry.

(c) Financial Risk

(i) Foreign Exchange:

The company�s activities have a highexport orientation. The loan portfolioin India is largely in Rupees while thatin Thailand is denominated in USdollar with the interest rate linked toLIBOR. Since the company has a netforeign exchange inflow, the risk islimited to a situation where the Rupeeappreciates in relation to theunderlying foreign currency.

Cross currency risks are minimal.

(ii) Interest rate risk:

Rupee loans in India are on a fixedrate basis. Most of these have beencontracted recently and therefore


18



reflect the current soft interest rateregime. As mentioned above, loansin Thailand carry a LIBOR linked rateand therefore potentially higheroutgoes are possible in the event thereis an upward movement in LIBOR.

(iii) Leveraging:

The investment in Thailand hasnecessitated borrowings resulting inan increase in the level of leveragingwith the term debt-equity ratioincreasing to 0.57:1 from 0.32: 1 atthe end of the 2002-03 over 2001-02. This has been brought down to0.45:1 as at the end of the year underreview. The debt-equity ratio at aconsolidated level was 0.90:1 at theend of the year.

The following factors mitigate this risk:

� Borrowings in Thailand arewithout recourse to Indianoperations except for a shortfallundertaking in the projectimplementation phase. With thecommissioning of the two filmlines during the year, this isrelevant only for the chips plantcurrently under implementation.

� The cost of debt for the companyhas come down significantlybecause of the investment graderating of the company�s debentureplacement as well as the overalldecline in the interest rate levels.

� The earnings in the current yearwill reduce gearing. However, thiswould be off-set by furtherborrowings for the Europeanventure.

(d) Project risk

The company is implementing aproject to manufacture chips at itsThailand plant to meet its internalrequirements. The company has a chipmaking plant at Khatima (India) andis thus familiar with the product. Inaddition, it has a technical know-howagreement for the continuous processproject from a reputed Europeanlicensor. The implementation ofthe chips project is progressingsatisfactorily.

In relation to its current size, theCompany has a large proposedinvestment in Europe under conside-ration. The successful implementationof the two PET film lines has demons-trated its project execution skills.Together with the fact that firmfinancing arrangements will be madebefore commencing work on thepolyester film project in Europemitigates this perceived risk suffi-ciently.

(e) Country risk

The capacity in Thailand is now twicethat of India and therefore fortunesfor the parent company in India areintricately interwoven with the successof the operations in Thailand. Basedon your Company�s experience so far,as well as, that of a whole spectrumof foreign owned businesses presentin Thailand for a long time suggeststhat the risks are not significant.

With exposure now being spread totwo countries, the overall Country riskfor the Company stands reduced.

This risk will be further diluted postthe expansion in Europe.

(f) Trade defense measures

As mentioned elsewhere in thediscussion, international trade in PETfilm has been the subject of severalanti-dumping and countervailing dutyinvestigations and actions. The highexport orientation of the industrymakes this an important business risk.An understanding of these measuresresulting from the past investigationagainst exports of PET film from Indiaand a geographical well-diversifiedsales portfolio will help mitigate theadverse fall-out of such an action.

10. FUTURE OUTLOOK

Your company remains optimistic on theanticipated financial performance in thecurrent year. Looking further ahead, if allor substantially all of the announcedcapacity additions come on-stream therewould be an oversupply situation in theshort-term. This is consistent with our past




experience. However, the continued growthof demand should bring the demand-supply balance in equilibrium over time.As explained elsewhere, moderating theinfluence of cyclical nature of the industryis an important challenge. The companyis constantly striving to position itself ina manner that while following broadindustry trends, it is able to consistentlydeliver better performance than itscompetitors. The expansion in Thailandand that proposed for Europe areconsistent with this strategy.

11. CAUTIONARY STATEMENT

Investors are cautioned that the discussioncontains forward-looking statements thatinvolve risks and uncertainties. TheCompany undertakes no obligation topublicly update or revise any forward-looking statements, whether as a resultof a new information, future events, orotherwise. Actual results, performances orachievements could differ materially fromthose expressed or implied in suchforward-looking statements.


20



Report on Corporate Governance

Pursuant to Clause 49 of the ListingAgreement, a Report on CorporateGovernance is given below :

A. MANDATORY REQUIREMENTS

1. Company�s philosophy on Code ofGovernance

The quintessential elements ofCorporate Governance are fairness,transparency, accountabil ity andresponsibility. At Polyplex, the emphasisis on :

� Enhancement of Shareholder value.

� Protection of the interest of theother shareholders.

� Long-term financial health of theCompany.

� Providing customers with qualityproducts and services at competitiveprices.

� Environmentally friendly productionmethods.

� Providing for fair wages and safeworking condition for employees andinviting inputs from employees indecision making.

� Contribution to the socio-economicdevelopment of the local community.

2. Board of Directors

� Composition :

The present strength of the Boardis eight Directors. The Boardcomprises of Executive and Non-Executive Directors. There are sevenNon-Executive Directors includingthe Chairman and one nomineedirector of IDBI, all of whom areIndependent Directors except theChairman who is from promoter�scategory. The Non-ExecutiveDirectors bring independentjudgment in the Board�sdeliberations and decisions.

� Attendance of each Director at theBoard Meeting/ AGM and otherDirectorships/ Memberships ofCommittees :

During 2003-2004 Seven BoardMeetings were held on April 19,2003, July 7, 2003, July 31, 2003,October 31, 2003, November 27,2003, January 30, 2004 and March31, 2004:

Name of Director Category of No. of Board Attendance at Other MembershipDirectorship Meetings the last AGM Directorships of Committees

Attended of Board(Other Cos.)

Sarvashri/

Sanjiv Saraf Promoter, 7 Absent 6 �Non Executive

Pranay Kothari Independent, 7 Absent 11 �Executive

S.G. Subrahmanyan Independent, 7 Absent 2 2Non Executive

O.P. Mehra Independent, 7 Absent 5 4Non Executive

B.K. Soni Independent, 5 Present 4 �Non Executive

Ramesh Bhatia Independent, 1 Absent 5 �Non Executive

M.K. Jain Nominee of IDBI, 7 Absent 1 �Non Executive

Suresh Surana Independent, 4 Absent 8 �Non Executive




3. Audit Committee

As reported last year the Company hasconstituted Audit Committee which has,inter alia, the following terms ofreference :

1. Overseeing the Company�s financialreporting process and the disclosureof its financial information to ensurethat the financial statement iscorrect, sufficient and credible.

2. Recommending the appointment andremoval of external auditor, fixationof audit fee and also approval forpayment for any other services.

3. Reviewing with the management theannual financial statements beforesubmission to the Board, focusingprimarily on :

� Any changes in accountingpolicies and practices.

� Major accounting entries basedon the exercise of judgementby the management.

� Qualifications in the draft auditreport.

� Significant adjustments arisingout of audit.

� The going concern assumption

� Compliance with AccountingStandards.

� Compliance with stock exchangeand legal requirementsconcerning financial statements.

� Any related party transactionsi.e. transactions of the Companyof material nature, withpromoters or the management,their subsidiaries or relativesetc. that may have potentialconflict with the interests of theCompany at large.

4. Reviewing with the management,external and internal auditors, theadequacy of internal controlsystems.

5. Reviewing the adequacy of internalaudit function, including thestructure of the internal auditdepartment, staffing and seniority

of the official heading the depart-ment, reporting structure coverageand frequency of internal audit.

6. Discussing with internal auditors anysignificant findings and follow upthereon.

7. Reviewing the findings of anyinternal investigations by theinternal auditors into matters wherethere is suspected fraud orirregularity or a failure of internalcontrol systems of a material natureand reporting the matter to theBoard.

8. Discussing with external auditorsbefore the audit commences, natureand scope of audit as well as havepost-audit discussion to ascertainany area of concern.

9. Reviewing the Company�s financialand risk management policies.

10. Looking into the reasons forsubstantial defaults in the paymentto the depositors, debentureholders, shareholders (in case ofnon-payment of declared dividends)and creditors.

Composition & Meetings and theattendance during the year :

Audit Committee of the Board ofDirectors comprises of four IndependentNon Executive Directors. Shri S.G.Subrahmanyan is the Chairman of AuditCommittee. During the year 2003-04three meetings of Audit Committee wereheld. Attendance of each member ofthe Committee during 2003-2004 isgiven below :-

Name of Director No. ofMeetingsattended

Shri S.G. Subrahmanyan 3

Shri O.P. Mehra 3

Shri B.K. Soni 2

Shri M.K. Jain 3

4. Remuneration to Directors

(a) The details of the remuneration paid toShri Pranay Kothari, Executive Directorduring the year 2003-2004 are givenbelow :


22



Salary Perquisites Total

Rs.6,00,000 Rs.7,96,984 Rs.13,96,984

(b) The details of payments to Non-Executive Directors during the year2003-2004 are given below :

Non-Executive Directors Sitting Fees

Shri Sanjiv Saraf Rs. 1,70,000/-

Shri S.G. Subrahmanyan Rs. 95,000/-

Shri O.P. Mehra Rs. 95,000/-

Shri B.K. Soni Rs. 1,50,000/-

Shri Ramesh Bhatia Rs. 5,000/-

Shri M.K. Jain* Rs. 95,000/-

Shri Suresh Surana** Rs. 50,000/-

* Sitting fee paid to nominating institution i.e. IDBI.** In addition a sum of Rs. 5,63,397/- was paid to a

firm in which Shri Suresh Surana is a partnertowards professional fee and reimbursement ofexpenses.

5. Investors/Shareholders GrievanceCommittee

Details of the Members, ComplianceOfficer, No. of complaints received andpending transfers as on close of thefinancial year.

The Company�s Shares TransferCommittee, inter alia, looks into theInvestors/ Shareholders Grievances.This Committee consists of Shri SanjivSaraf, Director, Shri Pranay Kothari,Executive Director and Shri B.K. Soni,Director. The members of the Committeepresent elect the Chairman of themeeting. Shri A.K. Gurnani, CompanySecretary is the Compliance Officer.

Complaints received from Investors/shareholders are promptly attended to.

As on March 31, 2004, 61 requestsinvolving 9400 shares were pending fortransfer/dematerialisation, which weregiven effect to on April 2, 2004.

6. General Body Meetings

Details of the location of the AnnualGeneral Meetings (AGMs) / Extra-ordinary General Meetings (EGMs) heldduring the last three years and thedetails of the resolutions passed or tobe passed by Postal Ballot.

Type of Financial Date Location of TimeMeeting Year the Meeting

AGM 2002-03 30.9.2003 Registered 11.00 a.m.Office atKhatima

EGM 2003-04 18.6.2003 Registered 11.00 a.m.Office atKhatima

EGM 2002-03 14.2.2003 Registered 11.00 a.m.Office atKhatima



None of the Special Resolutions passedduring the last three AGMs/ EGMs wererequired to be passed through postalballot.

No Special Resolutions for this year isrequired to be passed by postal ballot.

7. Disclosures

Disclosure on materially significantrelated party transactions i.e.transactions of the Company of materialnature, with its Promoters, the Directorsor the Management, their subsidiariesor relatives etc. that may have potentialconflict with the interest of the Companyat large.

During the year, there were notransactions of material nature with thedirectors or the management or theirsubsidiaries or relatives that hadpotential conflict with the interest of theCompany.

Details of non-compliance by theCompany, penalties, strictures imposedon the Company by Stock Exchanges orSEBI or any statutory authority, on anymatter related to capital markets, duringthe last three years.

There are no penalties, stricturesimposed on the Company by StockExchanges or SEBI or any statutoryauthority on any matter related tocapital markets, during the last threeyears.




8. Means of Communication

(i) Half yearly report is not being sentto each household of shareholdersas shareholders are intimatedthrough the press and theCompany�s Website www. polyplex.com. Quarterly/ Annual results arealso displayed on Company�sWebsite.

(ii) The quarterly and half yearly resultsare published in the leadingnewspapers.

(iii) Management Discussion andAnalysis forms part of the AnnualReport, which is posted to theshareholders of the Company.


24



General Shareholders Information

1. Annual General Meeting 31.08.2004 at 11.00 a.m. at theDate & Time : Registered Office at :

Lohia Head Road, Khatima-262 308Distt. Udham Singh Nagar,UTTARANCHAL

2. Book Closure Date: 28.08.2004 to 31.08.2004(both days inclusive)

3. Dividend Payment Date: On or from 1.09.2004

4. Listing on Stock Exchanges:

Equity Shares of the Company are listed on following Stock Exchanges:

The Stock Exchange, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001

The National Stock Exchange of India Limited, Bandra Kurla Complex,Mumbai-400051

Listing Fees for the year 2004-05 has been paid to both the Exchanges, whereshares of the Company are listed.

During the year 2003-04 Company�s equity shares have been de-listed fromAhmedabad, Delhi, Kanpur and Madras Stock Exchanges pursuant to the specialresolution passed by the shareholders in the last Annual Genral Meeting in thisbehalf and Company�s application for voluntary de-listing of Shares from theCalcutta Stock Exchange Association Ltd., is pending with the Exchange.

5. Scrip Code

The Company�s equity shares have been allotted following scrip codes :-

The Stock Exchange, Mumbai Scrip Code 524051National Stock Exchange of India Ltd. POLYPLEXReuters Code PLYP.BONSDL/ CDSL - ISIN INE633B01018

6. Stock Market Data

Share prices on The Stock Exchange, Mumbai and the National Stock Exchangeof India Ltd. during 2003-2004 were as follows:




The Stock Exchange, The National StockMumbai Exchange of India Ltd.

Months High Low. Volume High Low Volume.Rs. Rs. Nos. Rs. Rs. Nos.

April, 2003 40.85 34.25 52424 41.20 33.55 359609

May, 2003 52.50 37.35 224825 52.60 37.75 624072

June, 2003 63.95 46.55 429390 63.55 45.00 1153552

July, 2003 89.40 60.60 1728612 89.00 60.60 5060421

August, 2003 100.00 72.00 892932 90.00 74.00 2306017

September, 2003 111.25 78.10 1146974 111.00 77.00 2692091

October, 2003 156.05 102.00 2262855 156.00 101.00 3772423

November, 2003 194.00 146.00 1174543 193.95 145.40 2092441

December, 2003 240.00 187.05 1797955 240.80 186.65 1757114

January, 2004 237.40 165.00 916474 239.70 166.45 2018543

February, 2004 186.90 139.35 516801 185.35 139.55 811094

March, 2004 157.80 119.75 456526 158.00 120.10 714282

Total 11600311 23361659

Source : www.bseindia.com & www.nseindia.com

7. Registrars and Share Transfer Agents:

MCS Ltd., Sri Venkatesh Bhawan, W-40, Okhla Industrial Area, Phase II, New Delhi110020 are the Registrars and Share Transfer Agents of the Company w.e.f. February6, 2004.

8. Distribution of shareholdings as on 31.03.2004

Shareholding of Number of % of Share % ofNominal Value of Rs. Shareholders Shareholders Amount (in Rs.) Shareholding

1 to 5000 8021 88.62 12423850 8.48

5001 to 10000 469 5.18 3894990 2.66

10001 to 20000 226 2.50 3546640 2.42

20001 to 30000 91 1.01 2342870 1.60

30001 to 40000 35 0.39 1296110 0.89

40001 to 50000 51 0.56 2396170 1.64

50001 to100000 60 0.66 4550890 3.11

100001 & above 98 1.08 115971480 79.20

Total 9051 100.00 146423000 100.00

9. Categories of shareholders as on 31.03.2004

Category No. of Shares %

Financial Institutions 7100 0.05

Mutual Funds 564844 3.86

Corporate Bodies 2169881 14.82

Promoters/Directors/Relatives 7120610 48.63

FIIs 1427900 9.75

NRIs/OCBs 79368 0.54

Individual/Public 3272597 22.35

14642300 100.00


26



10. Stock Performance of the Company in comparison to NSE NIfty Sensex

Polyplex�s Share Price Movement vsNSE Nifty Index (2003-04)

11. Dematerialisation of shares and liquidity.

Shares of the Company are available for dematerialisation and are being traded indematerialised form by all investors w.e.f. April 30,2001. Shareholders of the Companyare advised to avail the facility of electronic shares through dematerialisation ofphysical scrips by opening an account with any of the recognized DepositoryParticipants.

The Company has not issued GDRs and there are no warrants/ convertible bondsoutstanding as at the year-end.

12. Plant Locations

The Company�s Polyester Chips and Polyester Film manufacturing facility is locatedat Khatima 262 308, Distt. Udham Singh Nagar, Uttaranchal.




13. Investor Correspondence

For any assistance regarding share transfers, transmissions, issue of duplicate sharecertificate(s), change of address, non-receipt of dividend, issue of duplicate dividendwarrants, dematerialisation of shares etc., please contact / write to: -

Shares Department Shares Department,Polyplex Corporation Limited or Polyplex Corporation LimitedLohia Head Road, B-37, Sector-1,Khatima 262308 NOIDA 201301,Distt. Udham Singh Nagar, Gautam Budh Nagar,Uttaranchal Uttar Pradesh

Phone : (05943) 250136 Phone : (0120) 2443716 to 19Fax : (05943) 250281 Fax : (0120) 2443723 & 24Email : [email protected]

14. Financial Statistics

Rs. in Lacs

2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 1997-98

Share Capital 1522.09 1522.09 1522.09 1522.09 1522.09 1522.09 1522.09

Reserves 10086.74 8119.67 6845.02 7870.20 7571.42 7588.60 7351.32

Borrowing 8375.87 7638.36 4318.08 5960.24 7787.85 6938.22 8479.95

Capital employed 19984.70 17280.12 12685.19 15352.53 16881.36 16048.91 17353.36

Gross Block 20133.59 19746.40 18356.81 18143.39 15795.68 15719.89 16211.94

Depreciation 9642.61 8735.91 7851.32 7137.73 6342.25 5553.34 4796.36

Net Block 10490.98 11010.49 10505.25 11005.66 9453.43 10166.55 11415.58

Gross Revenue 19063.25 14538.42 12838.16 12123.36 8997.98 8169.32 10494.16

Expenses 14290.32 11324.97 10440.61 10664.36 8045.35 6926.22 8892.16

Depreciation 921.56 903.54 878.11 854.02 803.53 814.76 770.39

Profit before Tax 3851.37 2309.91 1519.44 604.98 149.10 428.34 831.61

Taxes 1223.56 641.07 613.65 47.02 23.37 62.21 285.51

Distributable Profits forthe year 2627.81 1668.84 905.79 557.96 125.73 366.13 546.10

Dividend (includingDividend Tax) 660.74 394.19 307.78 259.18 142.91 128.85 161.06

Earnings per share (Rs.) 17.95 11.40 6.19 3.81 0.86 2.50 3.73

Dividend per share ofRs.10/- each (in Rs.) 4.00 2.50 2.00 1.50 0.80 0.80 1.00


28



TO THE MEMBERS OF POLYPLEXCORPORATION LIMITED

We have examined the compliance ofconditions of Corporate Governanceprocedures implemented by PolyplexCorporation Limited for the year ended onMarch 31, 2004, as stipulated in Clause 49of the Listing Agreement of the saidCompany with the Stock Exchanges in India.

The compliance of conditions of CorporateGovernance is the responsibility of theManagement. Our examination was limitedto a review of procedures andimplementation thereof, adopted by theCompany for ensuring the compliance ofthe conditions of Corporate Governnance.It is neither an audit nor an expression ofopinion on the financial statements of theCompany.

We further state that such compliance isneither an assurance as to the future

Auditors� Certificate

viability of the Company nor the efficiencyor effectiveness with which the Managementhas conducted the affairs of the Company.

On the basis of our review and according tothe information and explanations given tous, the conditions of Corporate Governanceas stipulated in Clause 49 of the ListingAgreements with the Stock Exchange havebeen complied with in all material respectby the Company and that no investorgrievance(s) is/are pending for a periodexceeding one month against the Companyas per the records maintained by the ShareTransfer and Shareholders GrievanceCommittee of the Board.

For Lodha & Co.,Chartered Accountants

Place : New Delhi N.K. LODHADated : June 3, 2004 Partner




Auditors� Report

TO THE MEMBERS� OF POLYPLEXCORPORATION LIMITED

We have audited the attached Balance Sheetof POLYPLEX CORPORATION LIMITED as at31st March 2004 and also the Profit and LossAccount and the Cash Flow Statement for theyear ended on that date annexed thereto.These financial statements are theresponsibility of the Company�s management.Our responsibility is to express an opinionon these financial statements based on ouraudit.

We conducted our audit in accordance withauditing standards generally accepted in India.Those standards require that we plan andperform the audit to obtain reasonableassurance about whether the financialstatements are free of material misstatement.An audit includes examining, on a test basis,evidence supporting the amounts anddisclosures in the financial statements. Anaudit also includes assessing the accountingprinciples used and significant estimates madeby management, as well as evaluating theoverall financial statement presentation. Webelieve that our audit provides a reasonablebasis for our opinion.

We report that-

(a) We have obtained all the information andexplanations, which to the best of ourknowledge and belief were necessary forthe purposes of our audit;

(b) In our opinion, proper books of accountas required by law have been kept by theCompany so far as appears from ourexamination of those books;

(c) The Balance Sheet, Profit & Loss Accountand Cash Flow Statement referred to inthis report are in agreement with thebooks of account;

(d) In our opinion the Balance Sheet, Profit &Loss Account and Cash Flow Statementdealt with by this report comply with theaccounting standards referred to in Section211(3C) of the Companies Act, 1956;

(e) On the basis of written representationsreceived from the directors of theCompany and taken on record by theBoard of Directors, we report that noneof the directors is disqualified as on 31stMarch 2004 from being appointed as adirector in terms of clause (g) of sub

section (1) of Section 274 of theCompanies Act, 1956;

(f) In our opinion and to the best of ourinformation and according to theexplanations given to us, the said accountsread together with notes thereon andappearing in Schedule of AccountingPolicies and Notes on Accounts give theinformation required by the CompaniesAct, 1956 in the manner so required andgive a true and fair view in conformitywith the accounting principles generallyaccepted in India :

i) in the case of the Balance Sheet, ofthe state of affairs of the Companyas at 31st March, 2004;

ii) in the case of the Profit & LossAccount, of the Profit for the yearended on that date; and

iii) in the case of Cash Flow Statement,of the Cash Flows for the year endedon that date.

(g) As required by the Companies (Auditors�Report) Order, 2003 (�the Order�) issuedby the Central Government of India interms of Section 227 (4A) of theCompanies Act, 1956, on the mattersspecified in paragraphs 4 and 5 of thesaid Order, we further report that:

1) (a) The Company has maintainedproper records showing fullparticulars including quantitativedetails and situation of FixedAssets.

(b) Fixed Assets have been physicallyverified by the Managementaccording to the regularprogramme of periodicalverification in phased mannerwhich in our opinion is reasonablehaving regard to the size of theCompany and the nature of itsFixed Assets. The discrepanciesnoticed on such physicalverification were not material.

(c) No substantial part of Fixed Assetshas been disposed off during theyear and therefore does not affectthe going concern assumption.

2) (a) The Inventory of the Company atall its locations (except stockslying with third parties and in


30



transit) have been physicallyverified by the Management atreasonable intervals.

(b) The procedures of physicalverification of inventory followedby the Management arereasonable and adequate inrelation to the size of theCompany and nature of itsbusiness.

(c) The Company is maintainingproper records of inventory. Thediscrepancies noticed on suchphysical verification of inventoryas compared to book records werenot material.

3) The Company has neither granted nortaken any loans, secured or unsecuredto and from companies, firms or otherparties covered in the registermaintained under Section 301 of theCompanies Act, 1956. Accordingly, theclauses 4 (iii) (b) to (d) of the Orderare not applicable.

4) In our opinion and according to theinformation and explanations given tous, there are adequate internal controlprocedures commensurate with thesize of the Company and the natureof its business with regard to purchaseof inventory, fixed assets and for thesale of goods. During the course ofour audit, we have not observed anycontinuing failure to correct majorweaknesses in internal control.

5) In our opinion and according to theinformation and explanations given tous, the transactions that need to beentered into the register maintainedunder Section 301 of the CompaniesAct, 1956 have been so entered andthe transactions exceeding the valueof five lakh rupees in respect of eachparty during the year have been madeat prices which are reasonable havingregard to the prevailing market pricesat the relevant time.

6) The Company has not accepted anydeposits under the provisions ofSection 58A and Section 58AA of theCompanies Act, 1956 and the rulesframed thereunder.

7) In our opinion, the Company has aninternal audit system commensuratewith the size of the Company andnature of its business.

8) The Central Government hasprescribed maintenance of costrecords under Section 209(1)(d) ofthe Companies Act, 1956, in respectof Polyester Chips. On the basis ofthe records produced and reviewedby us, we are of the opinion that,prima facie, the prescribed recordshave been made and maintained.However, we are not required to andhave not carried out any detailedexamination of the said records, witha view to determine whether they areaccurate or complete.

9) (a) In our opinion and according tothe information and explanationsgiven to us, undisputed statutorydues including Provident Fund,Investor Education and ProtectionFund, Employees� StateInsurance, Income tax, Sales tax,Wealth tax, Custom Duty, ExciseDuty, Cess and any otherstatutory dues have generallybeen deposited in time during theyear with the appropriateauthorities and there are noundisputed statutory dues payablefor a period of more than sixmonths from the date theybecame payable as at 31st March2004.

(b) (i) In our opinion and accordingto the information &explanations given to us,there are no dues in respectof wealth tax and cess thathave not been deposited onaccount of any dispute.

(ii) In our opinion and accordingto the information &explanations given to us, thedues in respect of sales tax,customs duty, excise duty,and income tax that have notbeen deposited with theappropriate authorities onaccount of dispute and theforum where the dispute ispending are given below:




Name of the Statute Nature of the dues Amount Forum where disputes(Rs. in Lacs) are pending

Sales Tax Act Entry Tax 25.58 High CourtSales / Entry Tax 3.29 Joint Commissionerand PenaltySales Tax 2.98 Deputy Commissioner

(Assessment)68.97 Assistant Commissioner

(Appeals)Customs Act Custom Duty 75.50 CommissionerIncome Tax Act Income Tax and 40.79 CIT (Appeals)

Interest thereonCentral Excise Act Excise duty 15.63 High Court

Excise Duty 24.00 Commissioner (Appeals)and PenaltyExcise duty 8.88 Appellate Authorities

10) The Company does not haveaccumulated losses as at the end ofthe financial year and has not incurredcash losses in the current financialyear and in the immediatelypreceeding financial year.

11) The Company has not defaulted inrepayment of any dues to financialinstitutions or banks or debentureholders.

12) According to the information andexplanations given to us, the Companyhas not granted any loans andadvances on the basis of security byway of pledge of shares, debenturesand other securities.

13) The Company is not a chit fund or anidhi / mutual benefit fund / society,therefore, the clause 4 (xiii) of theOrder is not applicable to theCompany.

14) In our opinion, the Company is notdealing in or trading in shares,securities, debentures and otherinvestments.

15) In our opinion, according to theinformation and explanations given tous, the Company has not given anyguarantee for loans taken by othersfrom banks and financial institutions.

16) In our opinion, on the basis ofinformation and explanations given tous, the term loans were applied forthe purposes for which the loans wereobtained.

17) On the basis of information andexplanations given to us, and on anoverall examination of the BalanceSheet of the Company, no funds raisedon short-term basis have been usedfor long-term investment and viceversa.

18) The Company has not made anypreferential allotment of shares to anyparties or companies covered in theregister maintained under Section 301of the Companies Act, 1956.

19) On the basis of records made availableto us and according to the informationand explanations given to us, theCompany has created securities (sinceregistered) in respect of thedebentures issued/outstanding duringthe year.

20) The Company has not raised anymoney through a public issue duringthe year.

21) Based upon the audit proceduresperformed and on the basis ofinformation and explanations providedby the Management, we report thatno fraud on or by the Company hasbeen noticed or reported during thecourse of our audit.

for Lodha & Co.,Chartered Accountants

Place : New Delhi. N.K. LodhaDate : June 3, 2004. Partner

Membership No. 85155


32



Balance SheetAS AT MARCH 31, 2004

As at As at31.3.2004 31.3.2003

Schedule (Rs. in Lacs) (Rs. in Lacs)

I. SOURCES OF FUNDS

Shareholders� Funds

Share Capital 1 1522.09 1522.09Reserves & Surplus 2 10086.74 8119.67

Loan Funds

Secured Loans 3 7575.87 6184.56Unsecured Loans 4 800.00 1453.80Deferred Tax Liability (Net) 9 1880.02 1823.88

TOTAL 21864.72 19104.00

II. APPLICATION OF FUNDS

Fixed Assets 5Gross Block 20133.59 19746.40Less: Depreciation 9642.61 8735.91

Net Block 10490.98 11010.49Capital work in progress 43.90 4.89

10534.88 11015.38

Investments 6 7511.30 4026.19Share Application Money pending allotmentwith Subsidiary 25.65 6.08

Current Assets, Loans and Advances 7Inventories 1819.09 1759.73Sundry Debtors 2357.38 1775.09Cash and Bank Balances 304.88 1046.10Loans and Advances 1196.35 1120.16

5677.70 5701.08Less : Current Liabilities 8 1529.92 1323.62Less : Provisions 8 354.89 321.11

1884.81 1644.73Net Current Assets 3792.89 4056.35

TOTAL 21864.72 19104.00

Notes to Accounts and

Significant Accounting Policies 15

As per our report of even date attached Schedules referred to above formFor Lodha & Co., an integral part of the Balance SheetChartered Accountants

N.K. Lodha Pranay Kothari S.G. Subrahmanyan B.K. SoniPartner Executive Director Vice-Chairman M.K. Jain

Ramesh BhatiaA.K. Gurnani Sanjiv Saraf Suresh Surana

Place : New Delhi Company Secretary Chairman DirectorsDate : June 3, 2004 Place : NOIDA




Profit and Loss AccountFOR THE YEAR ENDED MARCH 31, 2004

Current PreviousYear Year


I. INCOMESales (Net of Excise of Rs.1999.34 Lacs,Previous Year Rs. 1311.20 Lacs) 18624.88 14206.97Other Income 10 438.37 331.45Stock Accretion / (Decretion) 11 (0.53) 230.37

TOTAL 19062.72 14768.79

II. EXPENDITUREManufacturing Expenses 12 10565.05 8167.09Operating and other Expenses 13 2823.18 2537.00Interest & Finance Charges (Net) 14 901.56 851.25

TOTAL 14289.79 11555.34

Profit before Depreciation 4772.93 3213.45Depreciation 921.56 903.54

Profit after Depreciation 3851.37 2309.91Less: Provision For Tax- Current Tax 1166.16 677.75- Deferred Tax 56.14 (35.96)

2629.07 1668.12Add : Prior period adjustments - tax (1.26) 0.72

Profit After Tax 2627.81 1668.84Add : Surplus brought forward 3850.70 3086.30Add : Debenture RedemptionAdd : Reserve written back 8.25 781.75

Available for Appropriation 6486.76 5536.89Transferred to General Reserve 300.00 167.00Debenture Redemption Reserve 425.00 1125.00Proposed Dividend 292.85 219.63Interim Dividend 292.85 146.42Corporate Dividend Tax 75.04 28.14

Surplus carried to Balance Sheet 5101.02 3850.70

Basic and diluted Earnings Per Share Rs.17.95 Rs.11.40

Notes to Accounts andSignificant Accounting Policies 15

As per our report of even date attached Schedules referred to above form anFor Lodha & Co., integral part of the Profit and Loss AccountChartered Accountants





34



Schedules

SCHEDULE 1SHARE CAPITAL

As at As at31.3.2004 31.3.2003

(Rs. in Lacs) (Rs. in Lacs)

AUTHORISED3,00,00,000 Equity Shares of Rs.10 each 3000.00 3000.00

ISSUED & SUBSCRIBED CAPITAL 1583.80 1583.801,58,38,000 Equity Shares of Rs.10 each

PAID-UP CAPITAL1,46,42,300 Equity Shares of Rs.10 eachfully paid up 1464.23 1464.23Add: Share Forfeiture Acoount 57.86 57.86

TOTAL 1522.09 1522.09

SCHEDULE 2RESERVES & SURPLUS

As at As at31.3.2004 31.3.2003


CAPITAL RESERVECentral Investment subsidy 25.00 25.00

25.00 25.00

SHARE PREMIUMPer last Balance Sheet 2030.43 2030.43

2030.43 2030.43

GENERAL RESERVEPer last Balance Sheet 1080.29 913.29Additions during the year 300.00 167.00

1380.29 1080.29

DEBENTURE REDEMPTION RESERVEPer last Balance Sheet 1133.25 790.00Additions during the year 425.00 1125.00

1558.25 1915.00Transferred to Profit & Loss Account 8.25 781.75

1550.00 1133.25

PROFIT & LOSS ACCOUNT 5101.02 3850.70

TOTAL 10086.74 8119.67




Schedules

SCHEDULE 3SECURED LOANS

As at As at31.3.2004 31.3.2003


(a) 18% Redeemable Non ConvertibleDebentures of Rs.100/- each 0.00 33.00

(b) 8.95% Redeemable Non ConvertibleDebentures of Rs.100000/- each 1500.00 1500.00

(c) 8.75% Redeemable Non ConvertibleDebentures of Rs.100000/- each 625.00 1000.00

(d) 12.70% Redeemable Non ConvertibleDebentures of Rs.100/- each 2000.00 2000.00

(e) 9.00% Redeemable Non ConvertibleDebentures of Rs.100/- each 1700.00 0.00

(f) Loans from Financial Institutions� Foreign Currency Term Loans 86.47 261.81� Corporate Rupee Loan 87.00 283.00

(g) Loans from Banks� Rupee Term Loans 88.90 62.01� Working Capital Loans :� Rupee Working Capital Demand Loans 0.00 155.91� Foreign Currency Working Capital Demand Loans 439.20 348.14� Cash Credit 8.08 11.31� Export Packing Credit Rupee Loan 40.00 282.16� Export Packing Credit Foreign Currency Loan 1001.22 247.13� Interest Accrued and Due on above 0.00 0.09

TOTAL 7575.87 6184.56

(1) Debentures at (b), (c), (d) and (e) above aggregating to Rs.5825.00 Lacs (PreviousYear Rs.4533.00 Lacs), Foreign Currency (FC) Term loan of Rs.86.47 Lacs (Previous YearRs.261.81 Lacs) and Corporate Rupee Loan of Rs.87.00 Lacs (Previous Year Rs.283.00 Lacs)are secured / to be secured on a pari passu basis by a first equitable mortgage in respectof Company�s immovable properties at Khatima, both present and future, and a charge by wayof hypothecation of Company�s movables (save and except book debts) both present andfuture, subject to prior charges created and/ or to be created in favour of the Company�sbankers on specified movables for working capital facilities.

(2) Debentures at (b), (c), (d) and (e) are also secured on a pari passu basis by registeredmortgage in respect of Company�s freehold immoveable property at Village Budasan, Kadi,Taluka, Distt. Mehsana, Gujarat.

(3) Debentures at (d) and (e), FC Term loan and Corporate Rupee Loan at (f) above are alsosecured by irrevocable guarantee of a Director / Promoter.

(4) Working Capital Loans from Banks aggregating to Rs.1488.50 Lacs (Previous Year Rs.1044.74Lacs) are secured / to be secured by way of hypothecation of inventories, book debts andother current assets both present and future, besides second charge on Company�s immovableproperties at Khatima and are further secured by irrevocable guarantee of a director/promoter.

(5) Rupee Term Loans from Banks are secured by hypothecation of Vehicles purchased therefrom.

(6) The Debentures at (b) above are redeemable in 2 equal annual instalments commencing fromthe expiry of 4th year from the date of allotment i.e., 30.10.2002. The Debentures at(c) above are redeemable in 8 equal quarterly instalments commencing from 30.09.2003. TheDebentures at (d) above are redeemable in 3 equal annual instalments commencing from theexpiry of the 3rd year from the date of allotment i.e., 15.07.2002. The Debenture at (e) aboveare redeemable in 3 annual instalments of Rs.400 Lacs, Rs.650 Lacs and Rs.650 Lacs payableat the end of 3rd, 4th and 5th year respectively from the date of allotment i.e. 23.05.2003.


36



Schedules

SCHEDULE 4UNSECURED LOANS

As at As at31.3.2004 31.3.2003


Corporate Rupee Loan 0.00 500.00

Corporate FC Loan 0.00 953.80

Commercial Paper 800.00 0.00

Maximum Outstanding at anytimeduring the year Rs.800.00 Lacs.(Previous Year Rs.500.00 Lacs)

TOTAL 800.00 1453.80

Note :The Commercial Paper issued were earmarked by Cash Credit Limits.

SCHEDULE 5FIXED ASSETS (Rs. in Lacs)

GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As at Additions Sale/ As at Upto For the Sale/ Upto As at As at1.04.03 during Adjust- 31.03.04 1.04.03 Year Adjust- 31.03.04 31.03.04 31.3.03

the year ments ments

Freehold Land 219.66 0.00 8.72 210.94 0.00 0.00 0.00 0.00 210.94 219.66

Leasehold Land 472.59 0.00 0.00 472.59 36.76 5.25 0.00 42.01 430.58 435.83

Buildings 2663.03 49.24 21.15 2691.12 555.08 57.12 1.50 610.70 2080.42 2107.95

Plant &Machinery 15142.46 308.66 40.54 15410.58 7783.63 763.62 0.00 8547.25 6863.33 7358.83

ElectricalInstallations 445.14 22.90 0.00 468.04 99.91 20.67 0.00 120.58 347.46 345.23

Furniture &Fixtures 271.51 14.20 0.00 285.71 64.68 16.73 0.00 81.41 204.30 206.83

OfficeEquipment 283.85 28.55 0.00 312.40 116.39 31.67 0.00 148.06 164.34 167.46

Vehicles 248.16 57.75 23.70 282.21 79.46 26.50 13.36 92.60 189.61 168.70

Total 19746.40 481.30 94.11 20133.59 8735.91 921.56 14.86 9642.61 10490.98 11010.49

Previous Year 18356.57 1482.84 93.01 19746.40 7851.32 903.54 18.95 8735.91 11010.49

Notes :1. Freehold Land costing Rs. 175.97 Lacs (Previous Year Rs. 175.97 Lacs) is not registered in the name of the Company.2. Freehold Land costing Rs. 28.05 Lacs (Previous Year shown under Leasehold Land Rs. 36.77 Lacs) is under Power of Attorney.3. Sale / Adjustments to Plant & Machinery includes Rs.23.39 Lacs (Previous Year Rs.9.13 Lacs) on account of Foreign Exchange

fluctuation.4. Plant & Machinery includes Rs.186.98 Lacs (Previous Year Rs. 186.98 Lacs) in respect of assets taken on financial lease.




Schedules

SCHEDULE 6INVESTMENTS (at Cost Less Provisions)

Face Nos. Nos. As at As atValue 31.3.2004 31.3.2003 31.3.2004 31.3.2003Rs. (Rs. in Lacs) (Rs. in Lacs)

Long Term Other than Trade

UNQUOTED - SHARES(Fully Paid up unless otherwise stated)

(1) Equity / Ordinary SharesInvestment in Other CompaniesEEL India Limited 10 65000 65000 30.00 30.00Polyplex Infotech Private Limited 10 69800 1000 6.98 0.10Spectrum Marketing Company Inc.(USD 125000) 25000 25000 44.54 44.54(common stock, no par value)

Excel International Limited 10 4020 4020 0.40 0.40Investment in Subsidiary CompanyPolyplex (Thailand) Limited * (Baht 10)Fully paid up- Baht 10.00 8527370 0 965.78 0.00Partly paid up- Baht 7.10(Previous Year Baht 8.80) 4672630 8000000 369.00 799.14

(2) Preference Shares-Non Cumulative RedeemablePolyplex (Thailand) Limited (Baht 10)(Fixed & Non Cumulative @MLR + 2%)Fully paid up- Baht 10.00 34109480 0 3863.16 0.00Partly paid up- Baht 7.10(Previous Year Baht 8.80) 18690520 32000000 1475.98 3196.55

CurrentOther than TradeQuoted- Other than Shares

Mutual Funds :Prudential ICICI Liquid Plan 10 1767506 0 275.00 0.00DSP Merrill Lynch Liquid Fund 10 1631511 0 250.00 0.00ING Vysya Liquid Fund 10 2070789 0 275.00 0.00

7555.84 4070.73Less : Provision for diminution in value of Investments 44.54 44.54

Grand Total 7511.30 4026.19

Aggregate of Unquoted Investments � (At Cost Less Provision) 6711.30 4026.19Aggregate of Quoted Investments � (At Book Value) 800.00 0.00

� (At Market Value) 806.50 0.00

Note:* Includes 6 ordinary shares beneficially owned by the Company but not registered in the name of the Company.

Mutual Funds purchased and sold during the year No of UnitsPrudential ICICI Liquid Plan 3986591DSP Merrill Lynch Liquid Fund 8491862ING Vyasya Liquid Fund 8083379Zurich India Liquid Fund 1508148Franklin Templeton Investments 1324538SBI Magnum Institutional 9563647Kotak Mahindra Liquid Plan 404645HSBC Cash Fund 3300128


38



Schedules

SCHEDULE 7CURRENT ASSETS, LOANS & ADVANCES

As at As at31.3.2004 31.3.2003


A. CURRENT ASSETSInventories(as valued and certified by Management)(at lower of cost and net realisable value)Raw Materials 677.54 574.17(including in Transit Rs. 186.63 Lacs,Previous Year Rs. 205.76 Lacs)

Stock in Process 259.93 361.07Finished Goods(including Scrap stock Rs. 6.71 Lacs,Previous Year Rs.10.82 Lacs) 318.79 218.18(including in transit stock Rs. 54.54 Lacs,Previous Year Nil )

Stores & Spares 562.83 606.31

Sub Total 1819.09 1759.73Sundry Debtors (Unsecured)Debts over six months� Considered good 61.46 244.31� Considered doubtful 13.26 25.50Other Debts� Considered good 2295.92 1530.78

2370.64 1800.59Less: Provision for doubtful debts 13.26 25.50

Sub Total 2357.38 1775.09Cash & Bank Balances:Cash in hand 8.29 1.80Cheques on hand 50.59 30.75With scheduled banks on� Current Accounts 161.83 643.22� Fixed Deposits* 84.17 370.33

Sub Total 304.88 1046.10

Total (A) 4481.35 4580.92

B. LOANS AND ADVANCES(Unsecured Considered Good)Inter Corporate Deposit 0.00 50.00Advances recoverable in cash or in kindor for value to be received** 919.15 834.99Deposits with Government Authorities & Others 134.91 84.71Advance Tax (Net of Provision for Tax) 87.89 59.01Balance with Customs & Excise Authorities 54.40 91.45

Total (B) 1196.35 1120.16

TOTAL (A+B) 5677.70 5701.08

* Includes Rs.83.15 Lacs (Previous Year Rs.168.34 Lacs) pledged with banks towards marginagainst Guarantees, Letters of Credit and Foreign Bill Purchase limit.

** Includes a sum of Rs.9.67 Lacs (Previous Year Rs. 11.67 Lacs) due from a director.Maximum amount due during the year Rs.11.67 Lacs (Previous Year Rs.13.67 Lacs)

** Includes capital advance of Rs.33.77 Lacs (Previous Year Rs.3.73 Lacs)




Schedules

SCHEDULE 8CURRENT LIABILITIES & PROVISIONS

As at As at31.3.2004 31.3.2003


CURRENT LIABILITIESAcceptances 166.49 282.26Sundry Creditors 660.14 626.13Other liabilities 287.04 220.02Security deposits / Advances from tenants 227.55 144.16Interest accrued & not due 154.22 22.31Investor Education and Protection Fund shall becredited by the following amounts, when due :-� Unpaid Dividend 34.48 28.74

Sub Total 1529.92 1323.62

PROVISIONSProvision for Wealth Tax 1.16 1.75Provision for Retirement Benefits 23.36 71.59Proposed Dividend(including Corporate Dividend Tax) 330.37 247.77

Sub Total 354.89 321.11

TOTAL 1884.81 1644.73

SCHEDULE 9DEFERRED TAX ASSETS AND LIABILITIES(arising out of timing differences in)

As at As at31.3.2004 31.3.2003


DEFERRED TAX ASSETSDisallowances as per Income Tax Act 15.82 36.06

15.82 36.06DEFERRED TAX LIABILITYDepreciation (1895.84) (1859.94)

(1895.84) (1859.94)

DEFERRED TAX LIABILITY (NET) (1880.02) (1823.88)


40



SCHEDULE 10OTHER INCOME



Income from let out Property(Tax deducted at source Rs.37.58 Lacs,Previous Year Rs. 25.58 Lacs)� Rent 128.61 102.79� Maintenance and Other Charges 226.44 164.45

Miscellaneous Receipts 7.27 24.69Profit on Sale of long term Investments (Net) 0.00 26.00Profit on Sale of Current Investments 27.98 0.00Dividend (Gross) on long term investments(Other than Trade) 1.63 0.02

Foreign Exchange Fluctuation (Net) 24.84 1.47Excess Provision Written Back 4.91 12.03Provision for doubtful debts written back 12.24 0.00Profit on Sale of Fixed Assets (Net) 4.45 0.00

TOTAL 438.37 331.45

SCHEDULE 11STOCK ACCRETION/(DECRETION)



Closing Stock� Finished Goods 318.79 218.18� Stock in Process - Others 30.83 50.79� Stock in Process - Chips 229.10 310.28

578.72 579.25

Opening Stock� Finished Goods 218.18 136.45� Stock in Process - Others 50.79 73.32� Stock in Process - Chips 310.28 139.11

579.25 348.88

TOTAL (0.53) 230.37

Schedules




SCHEDULE 12MANUFACTURING EXPENSES



Raw Materials Consumed 7805.73 5818.98Stores & Spares Consumed 648.99 449.46Packing Material Consumed 428.16 396.63Job Work Charges 0.00 33.32Power & Fuel 1590.51 1403.23Repairs and Maintenance� Building 14.79 5.37� Plant & Machinery 76.87 60.10

TOTAL 10565.05 8167.09

Schedules


42



SCHEDULE 13OPERATING AND OTHER EXPENSES



PERSONNEL EXPENSESSalaries, Wages and Allowances 726.11 638.62Contribution to Provident and other Funds 37.00 37.36Staff Welfare Expenses 72.46 71.26

Sub Total 835.57 747.24

ADMINISTRATIVE EXPENSESRent (including lease rent Rs. 9.97 Lacs,Rent Previous Year Rs. 9.97 Lacs) 22.60 20.42Electricity & Water Charges (Net) 48.85 60.82Repairs & Maintenance (Net) 24.26 22.06Rates and Taxes 33.82 17.10Postage and Telephone 76.59 78.16Printing and Stationery 22.29 27.81Travelling and Conveyance 181.41 181.63Vehicle Expenses 44.85 50.23Insurance 207.80 182.62Legal and Professional Fee 285.09 280.24Miscellaneous Expenses 155.42 155.13Auditors� Remuneration 4.53 4.16Directors� Sitting Fee 6.60 3.35

Sub Total 1114.11 1083.73

SELLING EXPENSESCash Discounts 0.00 1.83Advertisement 7.04 8.19Sales Promotion 14.94 23.21Freight 626.01 483.68Sample to Customers 0.00 3.55Commission on Sales 116.48 91.83

Sub Total 764.47 612.29

OTHER EXPENSESAssets Written Off 17.15 0.00Loss on Sale of Long Term Investments 0.00 11.70Excise Duty (Net of Recovery) 4.45 38.30Donation 74.79 0.33Previous Year Expenses (Net) 0.27 16.70Provision for Doubtful Debts 0.00 8.56Sundry Balances Written Off (Net) 0.13 6.74Bad Debts Written Off 12.24 11.41

Sub Total 109.03 93.74

TOTAL 2823.18 2537.00

Schedules




SCHEDULE 14INTEREST & FINANCE CHARGES



Interest on Term Loans / Debentures 685.61 552.20Interest on Working Capital Loans 135.33 235.03

820.94 787.23

Less : Interest on Deposits and Others(Tax Deducted at source Rs.2.88 Lacs,Previous Year Rs.5.34 Lacs ) 37.56 27.78

Less : Forward Cover Premium / Loss 27.60 16.73

755.78 742.72

Bank & Other Financial Charges 145.78 108.53

TOTAL 901.56 851.25

Schedules


44



Notes to Accounts

SCHEDULE 15NOTES TO ACCOUNTS AND SIGNIFI-CANT ACCOUNTING POLICIES

A. NOTES TO ACCOUNTS

1. Est imated amount of contractsremaining to be executed on capitalaccount and not provided for (Net ofAdvances) - Rs. 657.20 Lacs. (PreviousYear- Rs. 241.48 Lacs).

2. Contingent Liabilities not provided forin respect of :

(a) Claims against the Company notacknowledged as debts - Rs.291.96 Lacs (Previous Year Rs.436.67 Lacs).

(b) Bills discounted with banks -Rs.178.75 Lacs (Previous Year Rs.1115.71 Lacs).

(c) Custom duty (excluding interestand penalty) which may arise ifobligation for exports is not fulfilledagainst import of machinery underExport Promotion Capital Goods(EPCG) Scheme: -

(Rs. in Lacs)


Gross of Modvat 453.91 811.68

Net of Modvat 272.09 495.44

(d) Counter Guarantees given to thebanks - Rs. 255.61 Lacs (PreviousYear - Rs. 204.13 Lacs), includingRs. 23.50 Lacs (Previous Year - Rs.25.50 Lacs) on behalf of otherbody corporates.

(e) Uncalled liability on shares partlypaid - Rs. 722.95 Lacs (PreviousYear - Rs 532.30 Lacs).

(f) Income tax matters in disputeunder appeal Rs.72.79 Lacs(Previous Year Nil).

3. Export Benefits are accounted for onaccrual basis. The import duty benefitunder Duty Exemption Pass Book(DEPB) Scheme and profit/loss on sale

of DEPB during the year aggregatingto Rs. 646.86 Lacs (Previous Year -Rs. 497.18 Lacs) has been credited toRaw Materials Consumed Account.

4. The expenditure on Research &Development has been debited to therespective heads of account since suchexpenses cannot be segregated in viewof the peculiar nature of activitiesrelating to such work.

5. Sundry Creditors include Rs. 22.17Lacs (Previous Year - Rs. 6.86 Lacs)due to Small Scale Industr ia lUndertakings; to the extent suchparties have been identified fromavailable information. The Small ScaleIndustrial Undertakings to whom theCompany owes and which isoutstanding for more than 30 days are:

(a) M/s Techno Packing

(b) M/s Sundeep Bobbins

(c) M/s Board Paper & Laminators

(d) M/s Ruchira Packaging Products

(e) M/s NK Paper Tube Industries

(f) M/s Ashu Plastic

(g) M/s Aruna Plastics

(h) M/s Wood Crafter

(i) M/s Arihant Plywood Industries

(j) M/s R.K. Pack Well Industries

(k) M/s Ambica Glass & Plywood stores

(l) M/s Northern Plywood Product

(m)M/s Paras Alloys & Salts Pvt. Ltd.

(n) M/s Chemico Chemicals Pvt. Ltd.

(6) Capital work in progress includesequipment not yet instal led,construction / erection material,advances for construction / erectionwork and machinery at site and / orin transit.

(7) Advances recoverable in cash or in kindincludes Loans and Advances in thenature of Loans :




Notes to Accounts

Balance as at Maximum Out- Balance as at Maximum Out-March 31, 2004 standing during March 31, 2003 standing during(Rs. in Lacs) the Year (Rs. in Lacs) the Year


(a) Subsidiary CompanyPolyplex (Thailand) Limited 5.46 21.07 1.81 32.39

(b) OthersInterest freeEmployees 59.19 69.99 65.24 99.01Global Solar Energy (India) Ltd., 5.00 5.00 2.48 6.25(Subsidiary till 03.03.2003)Excel International Limited � � � 20.00(Subsidiary till 10.12.2002)

8. Remuneration to Auditors :



� Audit fee(including service tax) 2.43 2.43

� Tax audit fee(including service tax) 0.38 0.38

� Certification & other fee 1.42 1.11� Out of pocket expenses 0.30 0.24

TOTAL 4.53 4.16

9. Particulars in respect of:(Qty. in MT.)

Current Year Previous Year

Licensed/ Installed Licensed/ Installedregistered registered

(a) Licensed & Installed Capacity* -� Plain Film 20000 20000 15000 15000� Metallised Film 4800 4800 3000 3000� Polyester Chips 20000 20000 15000 15000

b) Production - Current Year Previous Year� Plain/Metallised Film� Net Production 18952 16760- Packed Prodn.** 19046 16827� Polyester Chips*** 18209 16967

* As certified by Management.** Includes 21 MT (Previous Year 9 MT) purchased, reprocessed and sold

during the year.*** Captive consumption 18268 MT. (Previous Year 16794 MT.).

10. Stock & Sales :


Qty. Value Qty. Value(M.T.)(Rs. in Lacs) (M.T.) (Rs. in Lacs)

(a) Opening StockPlain/Metallised Film 270 207.36 265 136.45

(b) Closing Stock*Plain/Metallised Film 425** 312.08 270 207.36

(c) Sales***Plain/Metallised Film 18818 18472.60 16764 14076.33Others � 152.28 � 130.64Total Sales 18624.88 14206.97

* Includes 87 MT (Previous Year Nil) material in transit.** Includes 12 MT material purchased and reprocessed.*** Includes sale of by-product, scrap, cost of product samples,

shortages & claims, and reprocessed Film 9 MT (PreviousYear 9 MT).

11. Particulars of Raw Materialsconsumed :


Qty. Value# Qty. Value#(M.T.)(Rs. in Lacs) (M.T.)(Rs. in Lacs)

Polyester Chips(Bought out) 1070 470.96 196 67.72PTA 15743 4695.11 14694 3944.18MEG 6241 2405.52 5869 1646.34Polyester Film 21 9.53 9 9.97Additives � 224.61 � 150.77

TOTAL 7805.73 5818.98

# Net of export incentive

12. Value and percentage of importedand indigenous raw materials andstores & spares consumed :


Value Value(Rs. in Lacs) % (Rs. in Lacs) %

Raw Materials� Imported 406.72 5.21 132.81 2.28� Indigenous 7399.01 94.79 5686.17 97.72

TOTAL 7805.73 100.00 5818.98 100.00

Stores & Spares� Imported 367.67 56.65 219.39 48.81� Indigenous 281.32 43.35 230.07 51.19

TOTAL 648.99 100.00 449.46 100.00


46



13. Expenditure in foreign currency (onpayment basis) :

Current Year Previous Year(Rs. in Lacs) (Rs. in Lacs)

Export Claims 2.12 11.42Travelling 52.50 54.66Consultation fees 109.44 111.86Interest 52.60 38.58Brokerage & Commission 46.97 31.05Others 6.49 5.80

TOTAL 270.12 253.37

14. Earnings in Foreign Exchange (onaccrual basis) :


FOB Value of Exports 6257.03 5921.13(Including deemed exportsRs.965.17 Lacs) (PreviousYear Rs.999.28 Lacs)Others 0.93 4.55

TOTAL 6257.96 5925.68

15. CIF Value of imports (on paymentbasis):


Raw material 340.27 110.20Stores & spares, Chemicalsand Packing material 401.82 214.07Capital Goods 48.50 299.86

TOTAL 790.59 624.13

16. Particulars of remuneration toManaging/Wholetime Director:


Salary 6.00 7.94Contribution to Providentand other Funds 1.50 2.12Perquisites andother benefits * 6.47 27.48

TOTAL 13.97 37.54

* Exclusive of provision for gratuity and leave encashment.

17. Earnings Per Share (EPS)


Net Profit for the year(Rs. in Lacs) 2627.81 1668.84No of Equity shares ofRs.10 each fully paid up 1,46,42,300 1,46,42,300Basic and diluted EPS (Rs.) 17.95 11.40

18. Segment Reporting :

i) The Company is in only one line ofbusiness namely Polyester Film.

ii) The Segment Revenue in thegeographical segments consideredfor disclosure is as follows:

(a) Revenue inside India includessales to customers locatedwithin India

(b) Revenue outside India includessales to customers locatedoutside India.

Information about Geographical Segments (by location ofcustomers) (Rs. in Lacs)

Within Outside TotalIndia India

1. External Revenue- 13492.09 5571.16 19063.25Sales & Other Income (9,430.88) (5,107.54) (14,538.42)

2. Carrying Amountof Segment Assets 15299.68 825.01 16124.69by location of assets (15748.70) (856.94) (16,605.64)

3. Capital Expenditure 520.31 0.00 520.31(1459.37) 0.00 (1459.37)

Figures in brackets represent Previous Year figures.

19.Related Party Disclosures.

Related Party Disclosures asrequired by AS-18, �Related PartyDisclosures�are given below:

A. Parties where control exists

Subsidiary Companies

� Polyplex (Thailand) Limited

� Excel International Limited (till10.12.2002)

� Global Solar Energy (India)Limited (till 03.03.2003)

B. Associates

� Punjab Hydro Power Limited*(till 03.03.2003)

* Subsidiary by itsel f andthrough subsidiary from10.04.2002 to 10.12.2002

C. Other related parties with whomtransactions have taken placeduring the year

Key Management Personnel & theirrelatives

� Shri Sanjiv Saraf (ManagingDirector till 29.05.2002)

� Shri Pranay Kothari (WholeTime Director)

Notes to Accounts




Enterpr ises over which KeyManagement Personnel, theirrelatives and major shareholdershave significant influence:

� Beehive Systems Limited

� Sanjiv Sarita InvestmentsPrivate Limited

� Polyplex Infotech PrivateLimited

� Manupatra InformationSolut ions Private Limited(formerly : Manupatra.comPrivate Limited)

� Shubra Ketu Foundation

Notes to Accounts

D. Nature of Transactions with related partiesRs. in Lacs

Subsidiaries Associates Key Enterprises Totalof the Management over which

Company Personnel Significantinfluenceexists

1 Purchase of material/services � � � 15.97 15.97(�) (�) (�) (20.52) (20.52)

2 Sale of Material/Services � � � 51.28 51.28(�) (�) (�) (51.69) (51.69)

3 Interest Received � � � � �(�) (5.80) (�) (�) (5.80)

4 Managerial Remuneration � � 13.97 � 13.97(�) (�) (37.54) (�) (37.54)

5 Directors� Sitting fee � � 1.70 � 1.70(�) (�) (1.00) (�) (1.00)

6 Advances given during 29.60 � � � 29.60the year (43.32) (85.02) (�) (�) (128.34)

7 Advance against Share 2697.80 � � � 2697.80Application Money (4021.78) (0.77) (�) (�) (4022.55)

8 Investment in Shares 2678.23 � � 6.88 2685.11(4015.69) (150.00) (�) (�) (4165.69)

9 Bank Guarantees given � � � � �on behalf of others (�) (17.50) (�) (�) (17.50)

10 Donations � � � 68.00 68.00(�) (�) (�) (�) (�)

Outstanding as at year end

11 Receivables 5.46 � 9.67 2.79 17.92(4.29) (5.80) (11.67) (26.07) (47.83)

12 Investment in Equity/ 6673.92 � � 6.98 6680.90Preference Shares (3995.69) (�) (�) (0.10) (3995.79)

13 Share Application Money 25.65 � � � 25.65(6.08) (�) (�) (�) (6.08)

14 Bank Guarantees � � � � �(6.00) (19.50) (�) (�) (25.50)

Guarantee given by Key Management Personnel for loans (Refer Note No. 4 of Schedule 3).


48



20. Figures for previous year have beenregrouped and rearranged whereverconsidered necessary. Figures inbrackets represent figures of previousyear.

21. Figures in the Balance Sheet and Profit& Loss Account have been expressedin Rs. Lacs with two decimals.

B. Significant Accounting Policies

1. Basis of Accounting

The Company follows the mercantilesystem of accounting and recognisesIncome and Expenditure on accrualbasis. The accounts are preparedunder the historical cost convention,in accordance with appl icableaccounting standards and generallyaccepted accounting principles.

2. Fixed Assets/Capital work inprogress

a) Fixed Assets are stated at cost ofacquisit ion. Loss or Gain onconversion of foreign currencyliabilities for acquisition of fixedassets are adjusted from the costof fixed assets.

b) Expenditure during construction/erection period is included undercapital work in progress / Pre-operative expenditure and areallocated to the respective fixedassets on complet ion ofconstruction / erection.

3. Borrowing Costs

Borrowing costs attr ibutable toacquisition / construction of qualifyingassets are capitalised on the respectiveassets and other borrowing costs arecharged to the Profit and Loss Account.

4. Investments

Long term investments are stated atcost less provision for permanentdiminution in the value of suchinvestments. Current investments arestated at lower of cost and netrealisable value.

5. Depreciation/Amortisation

Depreciation on fixed assets (includingassets acquired under finance lease)is provided on Straight Line Method ,except on fixed assets at Khatima of

the first Polyester Film Line on whichdepreciation is provided on WrittenDown Value method and at the ratesand in the manner prescribed inSchedule XIV to the Companies Act,1956. Depreciat ion on addit ion/disposal of fixed asset is provided onpro-rata basis from the date ofaddition/disposal. Plant & Machinerypertaining to the polyester film linesis considered as continuous processas per technical assessment. Leaseholdland is amortised over the period oflease.

6. Foreign Currency Transactions

Al l foreign currency assets andliabilities (not covered by forwardcontracts) as at the Balance Sheet dateare restated at the appl icableexchange rate prevailing at that date.Such increase/decrease relating tofixed assets is adjusted to the cost offixed assets and that relating to otheritems is adjusted in the Profit and LossAccount. Exchange difference inrespect of forward exchange contracts(other than for acquisition of fixedassets) is recognised as Income/Expense over the life of the contract.

7. Inventories

a) Inventories are valued as follows :-

(i) Raw Materials and Stores &Spares - At lower of cost andnet realisable value.

(ii) Stock in process and finishedgoods - At lower of cost andnet realisable value.

b) Cost for the purpose of valuationis determined as under :-

(i) Raw material and stores &spares - Weighted Average cost

(ii) Stock in Process and Finishedgoods - At raw material cost,labour and related overheadsincluding administrat iveoverheads and depreciation.

8. Research & DevelopmentExpenditure

Revenue expenditure on research anddevelopment is charged against theprofit of the year in which it is incurredand capital expenditure is added to

Notes to Accounts




the cost of fixed assets in the year inwhich it is incurred.

9. Retirement Benefits

Company�s contribution to ProvidentFunds and Superannuation fund arecharged to Profit & Loss Account.Leave encashment benefit is providedon accrual basis as determined onactuarial valuation. Gratuity is accruedon actuarial valuation basis and fundedthrough a trust for which a policy withLife Insurance Corporation of India,has been taken.

10.Contingent Liabilities

Contingent liabilities are not providedfor and are disclosed by way of note.

11. Government Grants

Grants relating to fixed assets areshown as deduction from the grossvalue of the fixed assets and those ofthe nature of Project Capital subsidyare credited to Capital reserve. OtherGovernment grants are credited toProfit and Loss account or deductedfrom the related expenses.

12. Provision for Tax

Current tax is determined as the

amount of tax payable in respect ofestimated taxable income for the yearand in accordance with the provisionsas per Income Tax Act, 1961 Deferredtax is recognised using the enactedtax rates and laws as on the BalanceSheet date, subject to the conside-ration of prudence in respect ofdeferred tax assets, on all timingdifferences, between taxable incomeand accounting income that originatein one period and are capable ofreversal in one or more subsequentperiods.

13. Leases

Assets acquired under finance lease,which effectively transfer to theCompany substantially all the risks andbenefits incidental to ownership of theleased item, are capitalised at thelower of the fair value and the presentvalue of the minimum lease paymentsat the inception of the lease term andare disclosed in the Fixed Assets.Lease payments are apportionedbetween the finance charges and thereduction of lease liability so as toachieve a constant rate of interest onthe remaining balance of the liability.Finance charges are charged directlyagainst income.

Notes to Accounts


50



Balance Sheet Abstract and Company�s General Business Profile

I. Registration Details

Registration No. 11596 State Code 20Balance Sheet Date 31.03.2004

II. Capital Raised during the year (Amount Rs. in Thousands)

Public Issue Nil Rights Issue NilBonus Issue Nil Private Placement Nil

III.Position of Mobilisation and Deployment of Funds (Amount Rs. in Thousands)

Total Liabilities 2374953 Total Assets 2374953

Source of FundsPaid up Capital 152209 Reserves & Surplus 1008674Secured Loans 757587 Unsecured Loans 80000Deferred Tax Liability (net) 188002

Application of FundsNet Fixed Assets 1053488 Investments 753695Net Current Assets 379289

IV. Performance of Company (Amount Rs. in Thousands)

Turnover 1906325 Total Expenditure 1521188Profit Before Tax 385137 Profit After Tax 262781Earning Per Share Rs.17.95 Dividend 40%

V. Generic Names of Three Principal Products of Company(as per monetary terms)

Product Description Item Code no. (ITC Code)Polyester Film 392069Polyester Chips 392069

Notes to Accounts

As per our report of even date attached Signatures to Schedule 1 to 15For Lodha & Co.,Chartered Accountants







Cash Flow Statement

2003-2004 2002-2003Rs. in Lacs Rs. in Lacs

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit Before Tax 3851.37 2309.91

Adjustments for:

Depreciation 921.56 903.54

Bad Debts/Provision for doubtfuldebts/Advances written off 0.13 26.71

Interest (Net) 901.56 851.25

Loss on sale of investments (Subsidiary) 0.00 11.70

Excess Provision Written Back �4.91 �12.03

Profit on Sale of Fixed Assets (Net) �4.45 0.00

Asset Written Off 17.15 0.00

Profit on sale of investments �27.98 �26.00

Dividend Received �1.63 1801.43 �0.02 1755.15

Operating Profit beforeWorking Capital Changes 5652.80 4065.06

Adjustments for:

Trade and other receivables �660.04 �829.70

Inventories �59.36 �519.56

Trade Payables �136.99 �856.39 498.92 �850.34

Cash Generated from Operations 4796.41 3214.72

Direct Taxes Paid (Net of Refunds) �1196.89 �677.21

Net Cash from Operating Activities 3599.52 2537.51

B. CASH FLOW FROMINVESTING ACTIVITIES

Purchase of Fixed Assets �388.03 �1255.93#

Sale of Fixed Assets 43.16 37.29

Inter Corporate Deposits 50.00 100.00

Purchase of Long Term Investments �2704.68 �4022.54

Purchase of Short Term Investments �5650.00 0.00

Sale of Long Term Investments 0.00 561.00#

Sale of Short Term Investments 4877.98 0.00

Interest/Dividend Received 77.14 58.95

Net Cash used in investing activities �3694.43 �4521.23

C. CASH FLOW FROMFINANCING ACTIVITIES

Proceeds from Long Term Borrowings 1700.00 4060.26

Repayment of Long Term Borrowings �1229.06 �1671.37

Net Proceeds from Short Term Borrowings 290.05 931.30

Interest Paid �834.90 �873.36

Dividend Paid �506.74 �295.52

Tax on distributed profits �65.66 0.00

Net Cash Used in Financing Activities �646.31 2151.31


52




Net Increase in Cash and Cash Equivalents �741.22 167.59

Cash and Cash Equivalentsas at 1.4.2003 (Opening Balance) 1046.10 878.51

Cash and Cash Equivalentsas at 31.3.2004 (Closing Balance) 304.88 1046.10

# Represents cash neutral to the extent of Rs.385.00 Lacs on account of acquisition of Assetsin lieu of investment in M/s Global Solar Energy (India) Ltd. and Rs.11.73 Lacs on accountof Assets acquired from a tenant against outstanding.

NOTES :

1. Cash and cash equivalents represents cash and bank balances as per Schedule 7.2. Previous Year figures are regrouped wherever necessary.


Pranay Kothari S.G. Subrahmanyan B.K. SoniExecutive Director Vice-Chairman M.K. Jain


Place : NOIDA Company Secretary Chairman DirectorsDate : June 3, 2004




Auditor�s Report

We have examined the attachedConsolidated Balance Sheet of PolyplexCorporation Limited and its Subsidiary asat 31st March 2004, the Consolidated Profitand Loss Account and the Consolidated CashFlow Statement for the year then ended.

These financial statements are theresponsibility of the Polyplex CorporationLimited management. Our responsibility isto express an opinion on these financialstatements based on our audit. Weconducted our audit in accordance withgenerally accepted auditing standards inIndia. These Standards require that we planand perform the audit to obtain reasonableassurance whether the financial statementsare prepared, in all material respects, inaccordance with an identified financialreporting framework and are free of materialmisstatements. An audit includes, examiningon a test basis, evidence supporting theamounts and disclosures in the financialstatements. An audit also includes assessingthe accounting principles used andsignificant estimates made by management,as well as evaluating the overall financialstatements. We believe that our auditprovides a reasonable basis for our opinion.

We did not audit the financial statementsof the subsidiary company M/s. Polyplex(Thailand) Ltd., whose financial statementsreflect total assets of Rs.24211.78 Lacs asat 31st March 2004 and total revenues ofRs. 19800.17 Lacs for the year then ended.The said financial statements have beenaudited by other auditor whose report hasbeen furnished to us, and our opinion,insofar as it relates to the amounts includedin respect of the subsidiary, is based solelyon the report of the other auditor.

We report that the consolidated financialstatements have been prepared by the

Company in accordance with therequirements of Accounting Standard (AS)21, Consolidated Financial Statements,issued by the Institute of CharteredAccountants of India and on the basis ofthe separate audited financial statementsof Polyplex Corporation Limited and itssubsidiary, whose financial statements havebeen recast/reclassified for the purpose ofconsolidation, by the management,considered in the consolidated financialstatements.

On the basis of the information andexplanation given to us and on theconsideration of the separate audit reporton individual audited financial statementsof Polyplex Corporation Limited and itsaforesaid subsidiary, we are of the opinionthat:

(a) the Consolidated Balance Sheet givesa true and fair view of the consolidatedstate of affairs of Polyplex CorporationLimited and its subsidiary as at 31stMarch 2004;

(b) the Consolidated Profit and LossAccount gives a true and fair view ofthe consolidated results of operationsof Polyplex Corporation Limited and itssubsidiary for the year then ended;and

(c) the Consolidated Cash Flow Statementof the cash flows of PolyplexCorporation Limited and its subsidiaryfor the year then ended.

For Lodha & Co.Chartered Accountants

Place : New Delhi N. K. LodhaDated: June 3, 2004 Partner

Membership No. 85155

AUDITOR�S REPORT TO THE BOARD OF DIRECTORS OF POLYPLEX CORPORATIONLIMITED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF POLYPLEXCORPORATION LIMITED AND ITS SUBSIDIARY


54



Consolidated Balance SheetAS AT MARCH 31, 2004

As at As at31.3.2004 31.3.2003


I. SOURCES OF FUNDS

Shareholder�s Funds

Share Capital 1 1522.09 1522.09Reserves & Surplus 2 13977.89 7861.00Loan Funds

Secured Loans 3 17081.24 12082.84Unsecured Loans 4 800.00 1453.80Deferred Tax Liability (Net) 9 1880.02 1823.88Translation Reserve 23.53 (66.28)

TOTAL 35284.77 24677.33

II. APPLICATION OF FUNDS

Fixed Assets 5Gross Block 38477.01 20215.79Less: Depreciation 10410.86 8753.33

Net Block 28066.15 11462.46Capital work in progress 60.37 9825.96

28126.52 21288.42Investments 6 837.38 30.50Current Assets, Loans and Advances 7Inventories 3422.92 2142.20Sundry Debtors 6106.67 1775.09Cash and Bank Balances 596.49 1265.04Loans and Advances 2091.34 1265.77

12217.42 6448.10Less : Current Liabilities 8 5611.84 2806.60Less : Provisions 8 357.28 321.72

5969.12 3128.32Net Current Assets 6248.30 3319.78Miscellaneous Expenditure 10 72.57 38.63

TOTAL 35284.77 24677.33

Notes to Accounts andSignificant Accounting Policies 16

As per our report of even date attached Schedule referred to above forms anFor Lodha & Co., integral part of the Balance SheetChartered Accountants







Consolidated Profit and Loss AccountFOR THE YEAR ENDED MARCH 31, 2004

Current CurrentYear Year


I. INCOMESales (Net of Excise of Rs.1999.34 Lacs,Previous Year Rs. 1311.20 Lacs) 37272.96 14206.97Other Income 11 875.08 326.01Stock Accretion 12 584.45 333.75

TOTAL 38732.49 14866.73

II. EXPENDITUREManufacturing Expenses 13 22688.51 8346.31Operating and other Expenses 14 5117.55 2698.32Interest & Finance Charges (Net) 15 1252.85 848.05

TOTAL 29058.91 11892.68

Profit before Depreciation 9673.58 2974.05Depreciation 1672.39 920.96

Profit after Depreciation 8001.19 2053.09Less: Provision For Tax� Current Tax 1166.16 677.75� Deferred Tax 56.14 (35.96)

6778.89 1411.30Less/Add : Prior period adjustments-tax (1.26) 0.72

Profit After Tax 6777.63 1412.02Add : Surplus brought forward 3592.03 2050.97Add : Profit on disposal of subsidiaries 0.00 1035.33Add/Less : Opening Balance of Polyplex (Thailand) Limited 0.00 (1.85)Add : Debenture Redemption Reserve written back 8.25 781.75

Available for Appropriation 10377.91 5278.22Transferred to General Reserve 300.00 167.00Debenture Redemption Reserve 425.00 1125.00Proposed Dividend 292.85 219.63Interim Dividend 292.85 146.42Corporate Dividend Tax 75.04 28.14

Surplus carried to Balance Sheet 8992.17 3592.03

Basic and diluted Earnings Per Share Rs.46.29 Rs.9.64

Notes to Accounts and SignificantAccounting Policies 16

As per our report of even date attached Schedules referred to above form anFor Lodha & Co., integral part of the Profit and Loss AccountChartered Accountants





56



Schedules

SCHEDULE 1SHARE CAPITAL

As at As at31.3.2004 31.3.2003


AUTHORISED CAPITAL3,00,00,000 Equity Shares of Rs.10 each 3000.00 3000.00

ISSUED & SUBSCRIBED CAPITAL1,58,38,000 Equity Shares of Rs.10 each 1583.80 1583.80

PAID-UP CAPITAL1,46,42,300 Equity Shares of Rs.10 each fully paid up 1464.23 1464.23Add: Share Forfeiture Acoount 57.86 57.86

TOTAL 1522.09 1522.09

SCHEDULE 2RESERVES & SURPLUS

As at As at31.3.2004 31.3.2003


CAPITAL RESERVECentral Investment Subsidy 25.00 25.00

25.00 25.00

SHARE PREMIUMPer last Balance Sheet 2030.43 2030.43

2030.43 2030.43

GENERAL RESERVEPer last Balance Sheet 1080.29 913.29Additions during the year 300.00 167.00

1380.29 1080.29

DEBENTURE REDEMPTION RESERVEPer last Balance Sheet 1133.25 790.00Additions during the year 425.00 1125.00

1558.25 1915.00Transferred to Profit & Loss Account 8.25 781.75

1550.00 1133.25

PROFIT & LOSS ACCOUNT 8992.17 3592.03

TOTAL 13977.89 7861.00




Schedules

SCHEDULE 3SECURED LOANS

As at As at31.3.2004 31.3.2003


(a) 18% Redeemable Non ConvertibleDebentures of Rs.100/- each 0.00 33.00

(b) 8.95% Redeemable Non ConvertibleDebentures of Rs.100000/- each 1500.00 1500.00

(c) 8.75% Redeemable Non ConvertibleDebentures of Rs.100000/- each 625.00 1000.00

(d) 12.70% Redeemable Non ConvertibleDebentures of Rs.100/- each 2000.00 2000.00

(e) 9.00% Redeemable Non ConvertibleDebentures of Rs.100/- each 1700.00 0.00

(f) Loans from Financial Institutions� Foreign Currency Term Loans 9591.84 5613.32� Corporate Rupee Loan 87.00 283.00

(g) Loans from Banks� Rupee Term Loans 88.90 62.01� Working Capital Loans� Rupee Working Capital Demand Loans 0.00 155.91� FC Working Capital Demand Loans 439.20 894.91� Cash Credit 8.08 11.31� Export Packing Credit Rupee Loan 40.00 282.16� Export Packing Credit FC Loan 1001.22 247.13

� Interest Accrued and Due on above 0.00 0.09

TOTAL 17081.24 12082.84

SCHEDULE 4UNSECURED LOANS

As at As at31.3.2004 31.3.2003


Corporate Rupee Loan 0.00 500.00Corporate FC Loan 0.00 953.80Commercial Paper 800.00 0.00

TOTAL 800.00 1453.80


58



Schedules

SCHEDULE 5FIXED ASSETS (Rs. in Lacs)

GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As at Additions Sale/ As at Upto For the Sale/ Upto As at As at1.04.03 during Adjust- 31.03.04 1.04.03 Year Adjust- 31.03.04 31.03.04 31.3.03

the year ments ments

Freehold Land 563.53 152.89 8.72 707.70 0.00 0.00 0.00 0.00 707.70 563.53

Leasehold Land 472.59 0.00 0.00 472.59 36.76 5.25 0.00 42.01 430.58 435.83

Buildings 2663.03 1347.29 21.15 3989.17 555.08 103.99 1.50 657.57 3331.60 2107.95

Plant & Machinery 15142.46 16504.21 40.54 31606.13 7783.63 1390.13 0.00 9173.76 22432.37 7358.83

Electrical Installations 445.14 22.90 0.00 468.04 99.91 20.67 0.00 120.58 347.46 345.23

Furniture & Fixtures 297.44 88.84 0.00 386.28 67.22 34.38 0.00 101.60 284.68 230.22

Office Equipment 347.56 71.81 0.00 419.37 121.54 58.90 0.00 180.44 238.93 226.02

Vehicles 284.04 167.39 23.70 427.73 89.19 59.07 13.36 134.90 292.83 194.85

Total 20215.79 18355.33 94.11 38477.01 8753.33 1672.39 14.86 10410.86 28066.15 11462.46

Previous Year 18356.57 1952.23 93.01 20215.79 7851.32 920.96 18.95 8753.33 11462.46

Notes:1. Freehold Land costing Rs. 175.97 Lacs (Previous Year Rs. 175.97 Lacs) is not registered in the name of the Company.2. Freehold Land costing Rs. 28.05 Lacs (Previous Year shown under Leasehold Land Rs. 36.77 Lacs) is under Power of Attorney.3. Addition to Plant & Machinery includes Rs. 23.39 Lacs (Previous Year Rs. 9.13 Lacs) on account of Foreign Exchange fluctuation.4. Plant & Machinery includes Rs.186.98 Lacs (Previous Year Rs. 186.98 Lacs) in respect of assets taken on financial lease.




Schedules

SCHEDULE 6INVESTMENTS (at Cost Less Provisions)

Face Nos. Nos. As at As atValue 31.3.2004 31.3.2003 31.3.2004 31.3.2003Rs. (Rs. in Lacs) (Rs. in Lacs)

Long Term other than Trade

UNQUOTED-SHARES(Fully paidup unless otherwise stated)

Equity / Ordinary SharesInvestment in Other CompaniesEEL India Limited 10 65000 65000 30.00 30.00Polyplex Infotech Private Limited 10 69800 1000 6.98 0.10Spectrum Marketing Company Inc. 25000 25000 44.54 44.54(common stock, no par value)Excel International Limited 10 4020 4020 0.40 0.40

Short Term other than TradeQuoted- Other than SharesMutual fundPrudential ICICI Liquid Plan 10 1767506 0 275.00 0.00DSP Merrill Lynch Liquid Fund 10 1631511 0 250.00 0.00ING Vysya Liquid Fund 10 2070789 0 275.00 0.00

881.92 75.04Less : Provision for diminution invalue of Investments 44.54 44.54

TOTAL 837.38 30.50


60



Schedules

SCHEDULE 7CURRENT ASSETS, LOANS & ADVANCES

As at As at31.3.2004 31.3.2003


A. CURRENT ASSETSInventories(as valued and certified by Management)(at lower of cost and net realisable value)Raw materials 1377.76 814.56(including in Transit Rs. 186.63 Lacs,Previous Year - Rs. 205.76 Lacs)Stock in process 397.44 437.13Finished goods (incl scrap stock Rs. 6.71 Lacs(Previous Year - Rs. 10.82) 869.64 245.50( including in transit stock Rs. 54.54 Lacs,Previous Year Nil )Stores & Spares 778.08 645.01

Sub Total 3422.92 2142.20Sundry Debtors (Unsecured)Debts over six months� Considered good 61.46 244.31� Considered doubtful 13.26 25.50Other Debts� Considered good 6045.21 1530.78

6119.93 1800.59Less: Provision for doubtful debts 13.26 25.50

Sub Total 6106.67 1775.09Cash & Bank BalancesCash in hand 19.55 8.09Cheques on hand 50.59 30.75With scheduled banks on� Current accounts 442.18 839.22� Fixed deposits* 84.17 386.98

Sub Total 596.49 1265.04

Total (A) 10126.08 5182.33B. LOANS AND ADVANCES(Unsecured Considered Good)Inter Corporate Deposit 0.00 50.00Advances recoverable in cash or in kind**or for value to be received 1759.53 980.60Deposits with Government Authorities & Others 151.89 84.71Advance Tax (Net of Provision for Tax) 87.89 59.01Balance with Customs & Excise Authorities 92.03 91.45

Total (B) 2091.34 1265.77

TOTAL (A+B) 12217.42 6448.10

* Includes Rs.83.15 Lacs (Previous Year - Rs.168.34 Lacs) pledged with banks towards marginagainst Guarantees, Letters of Credit and Foreign Bill Purchase limit.

** Includes a sum of Rs.9.67 Lacs (Previous Year - Rs.11.67 Lacs) due from a director. Maximumamount due during the year Rs.11.67 Lacs (Previous Year - Rs.13.67 Lacs)

** Includes capital advance of Rs.458.77 Lacs (Previous Year - Rs.3.73 Lacs)




Schedules

SCHEDULE 8CURRENT LIABILITIES & PROVISIONS

As at As at31.3.2004 31.3.2003


CURRENT LIABILITIESAcceptances 166.49 282.26Sundry Creditors 4554.63 1602.20Other liabilities 466.41 716.44Security deposits / Advances from tenants 227.55 144.16Interest accrued & not due 162.28 32.80Investor Education and Protection Fundshall be credited by the following amountswhen due :-� Unpaid Dividend 34.48 28.74

Sub Total 5611.84 2806.60

PROVISIONSProvision for Wealth Tax 1.16 1.75Provision for Retirement benefits 25.75 72.20Proposed Dividend (including Corporate Dividend tax) 330.37 247.77

Sub Total 357.28 321.72

TOTAL 5969.12 3128.32

As at As at31.3.2004 31.3.2003


DEFERRED TAX ASSETSDisallowances under Income Tax Act 15.82 36.06

15.82 36.06

DEFERRED TAX LIABILITYDepreciation (1895.84) (1859.94)

(1895.84) (1859.94)

DEFERRED TAX LIABILITY (NET) (1880.02) (1823.88)

SCHEDULE 9DEFERRED TAX ASSETS AND LIABILITIES(Arising out of timing differences in)


62



SCHEDULE 10MISCELLANEOUS EXPENSES

As at As at31.3.2004 31.3.2003


Miscellaneous Expenses (to the extent not written off) 72.57 38.63

72.57 38.63

Schedules

SCHEDULE 11OTHER INCOME



Income from let out Property� Rent 128.61 102.79� Maintenance & other charges 226.44 164.45Miscellaneous Receipts 12.97 24.69Profit on Sale of Long Term Investments (Net) 0.00 26.00Profit on Sale of Short Term Investments 27.98 0.00Dividend (Gross) on Long Term Investments 1.63 0.02Foreign Exchange Fluctuations (Net) 455.76 (3.97)Excess Provision written back 5.00 12.03Provision for doubtful debts written back 12.24 0.00Profit on Sale of Fixed Assets (Net) 4.45 0.00

TOTAL 875.08 326.01




Schedules

SCHEDULE 12STOCK ACCRETION



Closing Stock� Finished Goods 869.64 245.50� Stock in Process - Others 168.34 126.85� Stock in Process - Chips 229.10 310.28

1267.08 682.63

Opening Stock� Finished Goods 245.50 136.45� Stock in Process - Others 126.85 73.32� Stock in Process - Chips 310.28 139.11

682.63 348.88

TOTAL 584.45 333.75

SCHEDULE 13MANUFACTURING EXPENSES



Raw Materials Consumed 17433.67 5972.82Stores & Spares Consumed 1261.00 449.46Packing Material Consumed 1335.79 398.33Job Work Charges 0.00 33.32Power & Fuel 2435.54 1422.95Repairs and Maintenance� Building 61.87 9.33� Plant & Machinery 160.64 60.10

TOTAL 22688.51 8346.31


64



SCHEDULE 14OPERATING AND OTHER EXPENSES



PERSONNEL EXPENSESSalaries, Wages and Allowances 1423.91 680.29Contribution to Provident and other Funds 47.08 37.67Staff Welfare Expenses 122.01 73.73

Sub Total 1593.00 791.69

ADMINISTRATIVE EXPENSESRent 74.28 36.82Electricity & Water Charges (net) 67.27 62.93Repairs & Maintenance (net) 48.11 23.32Rates and Taxes 37.23 22.30Postage and Telephone 194.51 78.35Printing and Stationery 28.07 31.72Travelling and Conveyance 269.22 195.38Vehicle expenses 81.55 51.31Insurance 324.91 184.95Legal and Professional fee 303.83 310.06Miscellaneous expenses 217.25 190.98Auditors� remuneration 9.50 7.64Directors� sitting fee 6.60 3.35

Sub Total 1662.33 1199.11

SELLING EXPENSESCash Discounts 0.00 1.83Advertisement 7.89 8.64Sales Promotion 35.04 24.25Freight 1385.20 483.68Sample to Customers 34.28 3.55Commission on sales 290.45 91.83

Sub Total 1752.86 613.78

OTHER EXPENSESAssets written off 17.15 0.00Loss on sale of investment 0.00 11.70Excise Duty (Net of Recovery) 4.45 38.30Donation 75.12 0.33Previous Year expenses (net) 0.27 16.70Provision for Doubtful debts 0.00 8.56Sundry balances written off (net) 0.13 6.74Bad Debts Written Off 12.24 11.41

Sub Total 109.36 93.74

TOTAL 5117.55 2698.32

Schedules




SCHEDULE 15INTEREST & FINANCE CHARGES



Interest on Term Loans / Debentures 982.52 552.20Interest on Working Capital Loans 137.90 236.45

1120.42 788.65Less : Interest on Deposits and Others 41.29 32.40Less : Forward Cover Premium 27.60 16.73

1051.53 739.52Bank & other Financial charges 201.32 108.53

TOTAL 1252.85 848.05

Schedules


66



Notes to Accounts

SCHEDULE 16

NOTES TO ACCOUNTS

1. The Consolidated Financial Statements(CFS) comprises the financialstatements of Polyplex CorporationLimited and its following subsidiary ason 31.03.2004.

Name of the Country of % ShareholdingCompany Incorporation & Voting Power

Polyplex (Thailand)Limited (PTL) Thailand 100%*

* Includes 6 ordinary shares not registered in the nameof the Company.

(a) The CFS have been prepared usinguniform accounting policies, inaccordance with the GenerallyAccepted Accounting Policies(GAAP). However, in respect of PTL,these financial statements areprepared

(i) in conformity with generallyaccepted accounting principlesin Thailand,

(ii) front end fee on loans areamortised over the repaymentperiod,

(iii) depreciation on Property,Buildings, Plant & Equipment bythe Straight Line Method (SLM)and all other assets by the sumof the year digits method, overthe estimated useful life of theassets as follows:

Building &Improvements 20 years

Machinery &Equipment 18 years

Furniture, fixturesand office equipment 5 years

Transportationequipment 5 years

(b) The effects of intra group transactionare eliminated in consolidation.

(c) Accounting Policies and Notes toAccounts of the financial statementof the Company and its Subsidiaryare set out in their respectivefinancial statements.

(d) Foreign Subsidiary Conversion:Revenue items have been consoli-dated at the average rate prevailingduring the year. Fixed Assets havebeen translated at the rate prevai-ling on the date of their acquisitionand depreciation providedaccordingly. Other Current Assetsand Liabilities are converted at therates prevailing at the end of theyear. Exchange gain/loss arising onconsolidation in respect of borrowingfor fixed assets are adjusted to thecost of such Fixed Assets and otherexchange gain/loss is recognised inthe Profit and Loss Account.

2. Estimated amount of contractsremaining to be executed on capitalaccount and not provided for (Net ofAdvances) - Rs.657.20 Lacs. (PreviousYear - Rs.241.48 Lacs).

3. Contingent Liabilities not provided forin respect of:

(a) Claims against the company notacknowledged as debts - Rs.291.96Lacs (Previous Year - Rs.436.67Lacs).

(b) Bills discounted with banks -Rs.178.75 Lacs (Previous Year-Rs.1115.71 Lacs).

(c) Custom duty (excluding interest andpenalty) which may arise ifobligation for exports is not fulfilledagainst import of machinery underExport Promotion Capital Goods(EPCG) Scheme: -

(Rs.in Lacs)


Gross of Modvat 453.91 811.68Net of Modvat 272.09 495.44

(d) Counter Guarantees given to thebanks - Rs.268.87 Lacs (PreviousYear - Rs.208.57 Lacs), includingRs.23.50 Lacs (Previous Year -Rs.25.50 Lacs) on behalf of otherbody corporates.

(e) Unused Letters of credit with bank.Rs.1386.32 Lacs (Previous Year -Rs.190.76 Lacs).

(f) Income tax matters in dispute underappeal Rs.72.79 Lacs (Previous YearNil).




8. Related Party Disclosures.

Related Party Disclosures as requiredby AS-18, �Related party Disclosures�aregiven below:

Related parties with whom transactionshave taken place during the year

A. Associates

� Punjab Hydro Power Limited*(till 03.03.2003)

* Subsidiary by itself and throughsubsidiary from 10.04.2002 to10.12.2002

B. Key Management Personnel & theirrelatives

� Shri Sanjiv Saraf (ManagingDirector till 29.05.2002 inPolyplex Corporation Limited,from 01.08.2002 in Polyplex(Thailand) Limited).

� Shri Pranay Kothari (Whole TimeDirector)

C. Enterprises over which KeyManagement Personnel, theirrelatives and major shareholdershave significant influence:

� Beehive Systems Limited

� Sanjiv Sarita InvestmentsPrivate Limited

� Polyplex Infotech Private Limited

� Manupatra Information SolutionsPrivate Limited (formerly:Manupatra.com Private Limited)

� Shubra Ketu Foundation

4. Export Benefits are accounted for onaccrual basis. The import duty benefitunder Duty Exemption Pass Book (DEPB)Scheme and profit/loss on sale of DEPBduring the year aggregating toRs.646.86 Lacs (Previous Year -Rs.497.18 Lacs) has been credited toRaw Material Consumed Account.

5. By virtue of the provisions of the Boardof Investment Promotion Act B.E. 2520of Thailand, PTL has been grantedcertain promotional privileges onmanufacturing and distributing thepolyester film as per the prevailingpolicy. The Company must comply withcertain conditions and restrictionsprovided for in the promotion certificate.

6. Earning Per Share (EPS)


Net Profit/(Loss) forthe year (Rs.in Lacs) 6777.63 1412.02No. of Equity shares ofRs.10 each fully paid up 1,46,42,300 1,46,42,300Basic and Diluted EPS (Rs.) 46.29 9.64

7. Segment Reporting

(i) The Company and PTL are in onlyone line of business namelyPolyester Film.

(ii) The Segment Revenue in thegeographical segments consideredfor disclosure is as follows:

(a) Revenues inside India includesales to customers locatedwithin India

(b) Revenues outside India includesales to customers locatedoutside India.

Information about Geographical Segments(by location of customer and assets)

Rs.in Lacs

Within Outside TotalIndia India

1. External Revenue- 13492.09 24655.95 38148.04Sales & Other Income (9430.88) (5102.10) (14532.98)

2 Carrying Amount of 15294.22 24961.82 40256.04Segment Assets by (15748.70) (11885.33) (27624.03)location of assets

3 Capital Expenditure 520.31 8069.43 8589.74(1255.93) (10329.08) (11585.01)

Figures in bracket represent previous year figures.

Notes to Accounts


68



Notes to Accounts

D. Nature of Transactions with related partiesRs.in Lacs

Associates Key Enterprises TotalManagement over whichPersonnel Significant

influenceexists

1 Purchase of material/services � � 15.97 15.97(�) (�) (20.52 ) (20.52)

2 Sale of Material/Services � � 51.28 51.28(�) (�) (51.69) (51.69)

3 Interest Received � � � �(5.80) (�) (�) (5.80)

4 Managerial Remuneration � 45.07 � 45.07(�) (57.78) (�) (57.78)

5 Director�s sitting fee � 1.70 � 1.70(�) (1.00) � (1.00 )

6 Advances given during the year � � � �(85.02) (�) (�) (85.02)

7 Advance against Share � � � �Application Money (0.77) (�) (�) (0.77)

8 Investment in Shares � � 6.88 6.88(150.00) (�) (�) (150.00)

9 Bank Guarantees given on � � � �behalf of others (17.50) (�) (�) (17.50)

10 Donations � � 68.00 68.00(�) (�) (�) (�)

Outstanding as at year end

11 Receivables � 9.67 2.79 12.46(5.80 ) (11.67) (26.07) (43.54)

12 Investment in Equity/ � � 6.98 6.98Preference Shares (�) (�) (0.10 ) (0.10)

13 Bank Guarantees � � � �

(19.50) (�) (�) (19.50)

Guarantee given by Key Management Personnel for certain loans.

9. Figures for previous year have beenregrouped and rearranged whereverconsidered necessary. Figures inbrackets represent figures of previousyear.

10. Figures in the Balance Sheet and Profit& Loss Account have been expressed inRs. Lacs with two decimals.

As per our report of even date attached Schedule 1 to 16 form anFor Lodha & Co., integral part of Balance SheetChartered Accountants

N.K. Lodha Pranay Kothari S.G. Subrahmanyan M.K. JainPartner Executive Director Vice-Chairman Ramesh Bhatia

B.K. SoniA.K. Gurnani Sanjiv Saraf Suresh Surana





Consolidated Cash Flow Statementfor 31.03.2004


A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit Before Tax 8001.19 2053.09

Adjustments for:

Depreciation 1672.39 920.96

Bad Debts/Provision for doubtful debts/Advances written off 0.13 26.71

Interest (Net) 1252.85 848.05

Loss on sale of investments (Subsidiary) 0.00 11.70

Excess Provision Written Back �5.00 �12.03

Loss on sale of Fixed Assets (Net) �4.45 0.00

Asset Written Off 17.15 0.00

Profit on sale of investments �27.98 �26.00

Dividend Received �1.63 �0.02

Translation Reserve 89.81 2993.27 �66.28 1703.09

Operating Profit before Working Capital Changes 10994.46 3756.18

Adjustments for:

Trade and other receivables �4737.36 �977.13

Inventories �1280.73 �902.02

Trade Payables 2459.42 �3558.67 1982.46 103.31

Cash Generated from Operations 7435.79 3859.49

Direct Taxes Paid (Net of Refunds) �1196.89 �677.21

Net Cash from Operating Activities 6238.90 3182.28

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets �8882.46 �11585.01#

Sale of Fixed Assets 43.16 37.29

Inter Corporate Deposits 50.00 100.00

Purchase of Long Term Investments �6.88 �21.89

Purchase of Short Term Investments �5650.00 0.00

Sale of Long Term Inestments 0.00 561.00 #

Sale of Short Term Investments 4877.98 0.00

Interest/Dividend Received 80.87 63.57

Net Cash used in investing activities �9487.33 �10845.04

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Long Term Borrowings 7136.88 9411.77

Repayment of Long Term Borrowings �2512.08 �1671.37

Net Proceeds from Short Term Borrowings �256.72 1478.07

Interest Paid �1215.80 �874.78

Dividend Paid �506.74 �295.52

Tax on Distributed Profits �65.66 0.00

Net Cash Used in Financing Activities 2579.88 8048.17


70




Net Increase in Cash and Cash Equivalents �668.55 385.41Cash and Cash Equivalents As at 1.4.2003 1265.04 985.30(Opening Balance)

Less : Adjustment on Account of Exclusion of 0.00 106.79Less : Subsidiaries (Note No.2)Add : Adjustment on Account of Inclusion of 0.00 1265.04 1.12 879.63Add : Subsidiary (Note No.2)Cash and Cash EquivalentsAs at 31.3.2004 (Closing Balance) 596.49 1265.04

# Represents cash neutral to the extent of Rs.385.00 Lacs on account of acquisition of Assetsin lieu of investment in M/s Global Solar Energy (India) Ltd. and Rs.11.73 Lacs on accountof Assets acquired from a tenant against outstandings.

NOTES :

1. Cash and cash equivalents represents cash and bank balances as per Schedule 7.2. Previous Year figures are regrouped wherever necessary.


Pranay Kothari S.G. Subrahmanyan B.K. SoniExecutive Director Vice-Chairman M.K. Jain


Place : NOIDA Company Secretary Chairman DirectorsDate : June 3, 2004




Details of Subsidiary Company (2003-04)

Name of the Subsidiary Company Polyplex (Thailand) Ltd *

Particulars Thai Baht Indian Rupees( In Lacs) (in Lacs)

a. Capital (including Share Application money) 5945.71 6699.57

b. Reserves & Surplus (adjusted for Misc. Expenses 3377.80 3818.58pending amortisation)

c. Total Assets (Fixed Assets + Capital Work in 21628.03 24131.36Progress + Current Assets)

d. Total Liabilities (Debts + Current Liabilities) 12306.68 13589.68

e. Details of Investment � �

f. Turnover (including Other Income) 16992.55 19084.79

g. Profit Before Taxation 3670.71 4149.82

h. Provision for Taxation � �

i. Profit After Taxation 3670.71 4149.82

j. Proposed Dividend � �

* The financial statements of the subsidiary company have been converted into Indian Rupees on thebasis of appropriate exchange rate. Refer Note 1(d) of Schedule 16 to Consolidated Accounts.

Note :The Company is making an application under Section 212(8) of the Companies Act, 1956, to the CentralGovernment, seeking exemption from attaching Annual Accounts and Reports of the Auditors� andDirectors� thereon, hence the same are not being attached. However, the Annual Accounts of thesubsidiary company and the related detailed information will be made available to the members of theCompany seeking such information at any point of time. The Annual Accounts of the subsidiary companywill also be kept open for inspection by any investor at the Registered Office of the Company between11.00 a.m. and 1.00 p.m. on all working days.


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